Brazil, China sign oil supply agreement

Brazil, eyeing a loan of some $10 billion for development of the country's offshore oil deposits, has agreed to supply China with 100,000-160,000 b/d of oil for a year at market prices.

Feb. 19, 2009

2 min read

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Feb. 19 -- Brazil, eyeing a loan of some $10 billion for development of the country's offshore oil deposits, has agreed to supply China with 100,000-160,000 b/d of oil for a year at market prices.

The oil supply agreement, to take effect immediately, came after a meeting between Brazil's President Luiz Inacio Lula da Silva and China's Vice-President Xi Jinping in the capital city of Brasilia.

Following the meeting, Jose Sergio Gabrielli, CEO of Brazil's state-run Petroleo Brasileiro (Petrobras), said China might lend Brazil as much as $10 billion and the terms of financing would be finalized and announced before Lula's visit to Beijing in May.

Gabrielli's words underlined an earlier report by Brazil's state news agency that Xi Jinping's visit to Brazil "should help the winding up of a $10 billion loan to be granted by China Development Bank (CDB) to Petrobras."

Petrobras and CDB have been negotiating the loan since November 2008, with the credit aimed at financing the exploration and exploitation of hydrocarbon reserves in the presalt layer.

"CDB would be paid with a secure supply of crude in the future, and apparently discussions are around the interest rates of the loan," the agency reported.

Contact Eric Watkins at [email protected].