While Hugo Chávez may be rubbing his hands together with glee as he officially confirms on Wednesday plans to borrow $4bn from China, now by far Venezuela’s biggest foreign source of financing, state oil company PDVSA has less to celebrate.

For needless to say, the fact that China has lent more (now $32bn) to Venezuela than any other country in Latin America comes at a cost – and PDVSA is bearing the brunt of the burden.

China lends to Venezuela in return for oil. In theory PDVSA should be sending some 430,000 barrels a day of crude oil and products (it is currently sending about 410,000 bpd) in repayment. And in fact, the latest loan is meant partly to go towards increasing oil production in the joint venture between China and Venezuela from 112,000 bpd currently to as much as 1.1m bpd by 2014 – although if the rest of PDVSA’s frequently postponed production targets are anything to go by, this figure should be viewed with a healthy dollop of scepticism.

In any case, it recently came to light that since 2010 PDVSA has not been able to discount the value of the oil it delivers to China from the royalties it must pay each year to the Venezuelan treasury. This means that PDSA is sending oil to China but not being paid for it – by neither the Chinese nor the Venezuelan government.

Assuming an average price of about $100 per barrel for 2011, that would cost PDVSA more than $15bn this year – money that the cash-strapped company with massive investment commitments can scarcely do without.

And indeed, opposition politicians recently made public a leaked document from earlier this year, a letter in which PDVSA’s president appeared to plead that the president allow the company greater financial leeway.

The same letter also revealed another startling fact: for as long as PDVSA keeps sending oil to China, its loans will have seniority over the rest of the market for debt repayment, according to a recent note from Barclays. So PDVSA should not be the only party viewing this mounting debt with caution.