China agreed to provide a $1 billion credit line for the acquisition of ships and offshore equipment for Mexican state oil company Pemex.

The agreement was signed by the visiting Chinese President Xi Jinping and his Mexican counterpart Enrique Pena Nieto, Pemex said in a statement late Tuesday. It marked a significant thaw in oil diplomacy between the two nations after years of a fraught relationship during the predecessors of their leaders, Hu Jintao and Felipe Calderon.

In a statement, Pemex said the credit line from the Chinese Export-Import Bank would "permit a major financial option for the renewal of the Pemex shipping fleet and the modernization of its offshore equipment."

The facility is to run for three years and represents the Chinese institution's first operation with the Mexican company, the statement added.

While China and its oil companies have developed a very close relationship with other Latin American oil powers such as Brazil, Venezuela and Argentina, Beijing has largely shied away from Mexico's state monopoly.

However, Pena Nieto has promised to enact a major reform later this year that is expected to open foreign investment into the Mexican energy sector.

Pena Nieto, who took power at the end of last year, visited China in April. Then the first signs of a thaw began to emerge, when Pemex started supplying 30,000 b/d of Mexican crude to China's Unipec -- trading arm of the country's largest refiner Sinopec -- under a two-year contract agreement that started in April.

In addition, Pemex and the Xinxing Cathay International Group signed a memorandum of understanding to seek opportunities in joint development in pipelines. On Tuesday, the memorandum was followed up by an accord between the two companies.