The deal was inked during a 24-hour visit to Venezuela by Chinese President Xi Jinping, who is on a tour of Latin America.
The money will go into the Joint Chinese-Venezuela Fund, which focuses on infrastructure and economic development in the South American country.
President Nicolas Maduro said the Venezuelan government would also put $1 billion into the fund, though officials later said that amount was in fact $2 billion.
The government said this weekend the fund has about $40 billion in it, though it was not clear if that included the amounts covered by Monday’s agreement.
Officials said the credit would be repaid by shipments of about 100,000 barrels per day of crude oil and products.
No other terms were given.
Under the leadership of late socialist President Hugo Chavez, Venezuela vastly expanded its use of loan-for-oil agreements with China, which helped ease stretched state finances while also improving the cash flow of state oil company PDVSA.
President Maduro, who won election last year after Chavez died from cancer, has continued that policy.
“It’s a virtuous (financing) formula which does not create onerous debts,” Maduro said. “We’ve reached the point of no return in a deep relationship with China.”
PDVSA said Venezuela is now sending about 524,000 bpd to China, a figure expected to rise to 1 million bpd by 2016.
Bilateral trade between Venezuela and China has soared to $19.2 billion annually, compared with just $183 million in 1998, the year Chavez came to power, officials said.
Chinese entities participate in transport, housing, education, electricity, communication and vehicle-assembly projects in Venezuela.
“The Chinese economy continues along solid development lines and is in fine condition to keep growing,” said Jinping, who was flying on to Cuba later on Monday.
“China will be a cooperation partner for all countries of the world like Venezuela.”
Among 38 accords signed on Monday was also a memorandum of understanding for China’s EximBank to lend $1 billion to PDVSA, an agreement for mineral exploration, the purchase of 1,500 Chinese buses and the creation of a new cement factory.
Venezuelan opposition politicians say much of China’s loans in the last 15 years have been wasted amid corruption, inefficiency and lack of transparency in public funds.
“If we are the country with the world’s biggest oil reserves, why do we have to indebt ourselves with China?” asked one opposition leader, Henrique Capriles, via Twitter, demanding information and accountability on a series of China-funded projects.