(Adds Chinese Foreign Ministry comment)
By Corina Pons and Alexandra Ulmer
CARACAS, March 19 (Reuters) - China will lend Venezuela around $10 billion in coming months, half as part of a two-way financing deal and the rest to develop oil fields, a senior official at state oil company PDVSA said on Thursday.
Fresh funds are a boon for financially squeezed Venezuela and are likely to increase market confidence over the OPEC nation's ability to meet major debt payments and arbitration awards. Venezuelan bonds rose following the news.
However, relief may be tempered as the loans appear largely earmarked and will only go so far in countering a steep tumble in oil prices and Venezuela's severe recession.
The first $5-billion loan, a renewal of the long-standing Joint Chinese-Venezuelan Fund, will be destined for wide-ranging projects, the official said.
With a five-year payment term instead of the usual three, the loan will be signed this month and deposited in Venezuela's international reserves in April.
The other "special" $5 billion loan is likely to stipulate hiring Chinese companies to boost production in PDVSA's mature oil fields, the source said. That 10-year loan will be signed in June, taken out by Venezuelan state development bank Bandes, and invested in 2015.
"China wants to decisively back investments in areas like mature oil fields so that PDVSA can rapidly increase its production," said the source, who asked not to be identified.
Chinese Foreign Ministry spokesman Hong Lei would not comment directly when asked about the loan, although he said the two countries were important economic partners.
"China will, on the basis of equality and mutual interest, continue to develop the cooperative relationship, including economic programs," he said, without elaborating.
China's Finance Ministry did not respond to a request for comment.
Energy-hungry China is keen to have a foothold in Venezuela, which has the world's largest oil reserves, as part of a broader trend in which Beijing provides billions in financing to ensure crude supplies. The loans often hinge on hiring Chinese construction, engineering or oil services companies.
The funds would provide welcome investment in Venezuela's oil sector just as PDVSA's pragmatic new leadership seeks to shore up output.
China has already loaned Venezuela more than $45 billion in return for repayment in oil and fuel. The money typically goes into funds focusing on infrastructure and economic development.
Venezuela's opposition has voiced concerns over what it deems excessive reliance on China and opacity on loan terms.