By Libby George and Dmitry Zhdannikov
LONDON (Reuters) - Poorer oil-producing countries which took out loans to be repaid in oil when the price was higher are having to send three times as much to respect repayment schedules now prices have fallen.
This has crippled the finances of countries such as Angola, Venezuela, Nigeria and Iraq and created a further division within the Organization of the Petroleum Exporting Countries.
Ahead of an OPEC meeting next week, poorer members have continued to push for output cuts to lift prices but wealthier Gulf Arab members such as Saudi Arabia, which are free of such debts, are resisting taking any action despite prices falling 60 percent in the past 2 years.
Angola, Africa's largest oil producer has borrowed as much as $25 billion from China since 2010, including about $5 billion last December, forcing its state oil firm to channel almost its entire oil output toward debt repayments this year.
This year Angola, Nigeria, Iraq, Venezuela and Kurdistan are due to repay a total of between $30 billion and $50 billion with oil, according to Reuters calculations based on publicly disclosed information and details given by participants in ongoing restructuring talks.
Repaying $50 billion required only slightly over 1 million barrels per day (bpd) of oil exports when it was trading at $120 per barrel but with prices of around $40, the same repayment would require exports of over 3 million bpd.
"All of those oil nations – Angola, Nigeria, Venezuela – have taken money for survival but haven't got any money left for investments. That is very damaging to their long-term growth prospects," said Amrita Sen from Energy Aspects think-tank.
"People tend to look at current production volumes but if you have committed your entire production to China or other buyers under loans – then you cannot invest to keep growing and won't benefit from higher prices in the future."
China has also become Venezuela's top financier via an oil-for-loans program which since 2007 has funneled $50 billion into Venezuelan coffers in exchange for repayment in crude and fuel, including a $5 billion deal last September.
While details of the loans have not been made public, analysts from Barclays (LON:BARC) estimate Caracas owes $7 billion to Beijing this year and needs nearly 800,000 bpd to meet payments, up from 230,000 bpd when oil traded at $100 per barrel.
Last week, Venezuela said it had reached a deal with China to improve the terms of loans, giving its economy "oxygen". It did not disclose the new terms.
Nigeria and Iraq also owe billions of dollars repayable in oil to companies such as Shell (L:RDSa) and Exxon Mobil (N:XOM), according to national oil firms and industry sources.
Iraq is trying to renegotiate contracts for investment and development of new oil fields that it has with companies including Exxon, Shell and Lukoil. It was supposed to repay the companies $23 billion this year with oil but is now arguing that it will only have enough crude to repay $9 billion.
Nigeria owes $3 billion this year in oil repayments to big oil companies which have helped the country fund its share of joint oil field development.
Iraq's semi-autonomous region of Kurdistan has leveraged all its oil production, worth $3 billion, to trading houses Vitol and Petraco as well as to Turkey to fund a fight against Islamic State, according to its natural resources minister.
Ecuador, one of OPEC's smallest member countries, borrowed up to $8 billion from Chinese and Thai firms, repayable with oil, between 2009 and 2015, according to the national oil company.
SUPPLY DISRUPTIONS
In contrast, OPEC's Gulf Arab members -- Saudi Arabia, the United Arab Emirates, Kuwait and Qatar -- have very few joint ventures with oil companies, do not have pre-payment deals with China and do not need to borrow from trading houses.
While Saudi Arabia saw every dollar from its oil sales going to state coffers, the poorer members had a large part of their oil revenue eaten up by debts, leaving no money to invest in infrastructure and field development.
As a result, Nigeria and Venezuela are now facing steep production declines at a time when Saudi Arabia is preparing to further ramp up supplies as it invested heavily in new fields.
This helps to explain why Saudi Arabia is resisting a global deal to reduce output because the lack of debt means it is able to use the money for development and reinforce its dominant position in oil markets.
Nigeria and Venezuela, meanwhile, are desperate for a deal that would reduce output and push up prices to help them invest in oil fields and repay fewer barrels to creditors. "It may ultimately be mounting supply disruptions in stressed states, rather than collective cartel action, that causes an accelerated market rebalancing,” RBC Capital's head of commodity strategy Helima Croft said.