OREANDA-NEWS. March 26, 2013. The death of Venezuelan leader Hugo Chavez may pose challenges for China, which is already struggling to produce and import crude oil from the Latin American country despite offering billions in oil-for-loans deals over the past few years, International Energy Agency said Wednesday.

China National Petroleum Corp., the country's top energy producer by volume, is expected to begin operating a 400,000-barrel-a-day oil field in Venezuela's Orinoco Basin in 2013, the IEA said in its monthly oil report. However, ramping up the project is expected to be "extremely slow given financial and operating constraints."

CNPC and Venezuela's state-run Petroleos de Venezuela, known as PDVSA, signed an agreement in 2010 to jointly develop the Junin-4 block. The block is expected to produce 2.9 billion barrels of extra-heavy crude in 25 years, CNPC has said on its website.

"Venezuela's oil industry faces enormous challenges, from severe under-investment by PDVSA and decaying infrastructure to an oil policy that kept foreign partners waiting in the wings for a serious reorganization," the IEA said.

"Agreements of oil-for-loans between China and Venezuela proved a windfall for Chavez's coffers initially, but the bilateral relationship has proved difficult and disappointing for Beijing," it added.

The volume and quality of crude from Venezuela has been "erratic" and a "major cause of concern" to the Chinese government, it said. "It is unlikely China will provide another oil?for?loan arrangement in the near term."

China's crude imports from Venezuela in January were down 37.25% from a year earlier, averaging about 218,000 barrels a day, according to customs data.

Venezuela was its seventh-largest supplier of crude in 2012, shipping 15.3 million tons, up almost a third from 2011.