China National Petroleum Corp. (CNPC), China's largest oil producer, and Venezuela's Petroleos de Venezuela, S.A. (PDVSA) have agreed to establish joint ventures to develop and refine heavy oil from Venezuela, CNPC officials said on Tuesday.

Under agreements signed by both companies during Chinese Vice Premier Hui Liangyu's visit to Venezuela last week, the companies will establish two joint ventures, one for heavy oil development in Venezuela and the other for oil refining in China.

The development joint venture in Block Junin 4 of the Orinoco belt would have an annual production capacity of 20 million tonnes. PDVSA will hold a 60-percent stake in the company and CNPC will hold 40 percent.

The refinery in China will refine 20 million tonnes of crude oil from Block Junin 4 annually. CNPC will hold 60 percent of this venture and PDVSA hold the remaining part.

The two companies would work out a detailed development plan and feasibility study, CNPC officials said.

The agreements between CNPC and PDVSA, the national oil company of Venezuela, will further deepen energy cooperation between China and Venezuela, which will be good for the economic development of both countries, said sources with CNPC.

Venezuela sends 350,000 barrels per day (bpd) of crude and derivatives to China. It is under a commitment to raise that to 500,000 bpd as of 2010 and 1 million bpd by 2012.