Petrobras-China: No Oil for Loans
May 1, 2009
Petrobras has secured a surprise jumbo financing from China in return for guaranteed oil supply. However, lack of detail suggests the deal may never be consummated.
by John Rumsey
A proposed, up to $10 billion loan-for-oil contract between China and Petrobras marks a departure for the Brazilian firm, which does not usually enter into deals committing future production. The agreement shows how urgently the firm wants to keep financing on track for its pre-salt exploration, which Petrobras president Sérgio Gabrielli has said will amount to $29 billion through 2013, and is the latest in a slew of global deals for the Chinese. However, if markets continue to recuperate, interest in inking a pact may wane.
The motivation for the deal is that Petrobras, and Brazils politicians, are eager to push ahead with the firms five-year business plan, announced in January, which would see $174.4 billion spent over the period and calls for investments of $28.6 billion this year alone.
The widely-publicized agreement, signed in February between Chinese entities...
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