China Grants Brazil $10B Financing in Exchange for Oil

Source:

"There isn't someone in the U.S. government that we can. . .have the kinds of discussions we're having with the Chinese."

As a result of negotiations with China's government by Brazil's President Luiz Inacio Lula da Silva, who was in China from May 18 to May 20, state-owned oil company Petrobras informed that it has concluded negotiations with China Development Bank (CDB) for a bilateral loan of $10 billion for 10 years.

The loan will be used to finance the Petrobras' $174.4 billion 2009-2013 investment plan and includes financing goods and services bought from China.

Within the scope of the contract signed with China Development Bank (CDB), it was agreed an increment on the actual crude oil export volumes from Brazil to China, said Petrobras.

Amongst the documents signed it was a long-term export agreement between Petrobras and UNIPEC ASIA was inked. UNIPEC is a wholly owned subsidiary of SINOPEC, which provides for export volumes of 150,000 barrels of oil per day for the first year and 200,000 barrels of oil per day on the 9 subsequent years, from Brazil's enormous pre-salt discoveries.

It was also signed between Petrobras and Sinopec a MOU—Memorandum of Understanding, which covers for the cooperation in several areas of mutual interest comprising exploration, refining, petrochemical and the supply of goods and services.

"The U.S. has a problem," Sergio Gabrielli, Petrobras' CEO, said recently when asked about the loan talks. "There isn't someone in the U.S. government that we can sit down with and have the kinds of discussions we're having with the Chinese."

Gabrielli was referring to the fact that Chinese government banks are willing to extend huge foreign loans to further China's long-term energy-security goals: ensuring diverse global supplies and winning entree into competitive regions for its oil companies. A string of recent oil loans to Russia, Kazakhstan and others has pushed China's total commitments to more than $45 billion.

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