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China Development Bank provides $10 billion line of credit for oil exploration in the Santos Basin (Linked to Record ID#38420)
| Funder | China Development Bank (CDB) |
|---|---|
| Recipient Organization | Petróleo Brasileiro S.A. (Petrobras) |
| Country | Brazil |
| Start Date | Jan 01, 2009 |
| End Date | Jun 28, 2031 |
| Duration | 8,213 days |
| Number of Grantees | 1 |
| Roles | Recipient |
| Data Source | AidData Chinese Aid |
| Grant ID | 36737 |
Grant Description
China Development Bank provides $10 billion line of credit for oil exploration in the Santos Basin On November 3, 2009, the China Development Bank (CDB) issued a $10 billion line of credit to Petroleo Brasileiro S.A. (Petrobras) for the exploration of the Santos Basin pre-salt oil fields (captured in Record ID#36737).
As a source of collateral, Petrobras signed a ten-year oil-supply contract with Sinopec’s (subsidiary) trading company, UNIPEC Asia, and agreed to provide 150,000 barrels per day in the first year (2009) and 200,000 barrels per day for the following nine years (2010-2019).
Sinopec agreed to pay market prices for Petrobras’ oil and deposit payments for the oil in Petrobras’ CDB account, and the borrower (Petrobras) agreed to maintain a minimum account balance equivalent to six months of interest payments. As of December 31, 2009, $3 billion of the $10 billion credit line had been utilized (i.e. drawn down) by the borrower.
Then, on February 10, 2010, Petrobras withdrew an additional $2 billion from the credit line. The borrower ultimately drew down $7 billion in total from the credit line (as captured via Record ID#38420). It was originally envisaged that $3 billion from the credit line would be utilized to purchase Chinese equipment.
However, Petrobras ultimately decided not to do so.
The loan proceeds were to be used by the borrower for oil exploration activities in the Santos Basin, which was part of a larger effort to upgrade the refinery capabilities of Petrobras. Sinopec — a Chinese state-owned oil company — and Petrobras were jointly responsible for implementing the project.
In January 2018, Petrobras pre-paid the residual balance of the oil supply contract, effectively ending its oil sales commitment to Sinopec.
Staff Comments
Most of China’s oil-backed loan agreements involve a bank, an oil company, and a trading firm. An oil company in the borrower country must sell a certain number of barrels during a specific period, and payments for the oil are sent directly to the bank. Therefore, the borrower uses the proceeds of oil sales to meet its loan repayment obligations. One source (https://www.ipea.gov.br/revistas/index.php/rtm/article/download/258/257) suggests that Petrobras contracted an additional $3 billion CDB loan with a 10-year maturity in 2014. However, AidData has not yet independently corroborated the existence of such a loan. This issue requires further investigation. More research is also needed to determine if the 2014 loan served as a ‘replacement’ for the $3 billion that Petrobras chose not to utilize under the $10 billion line of credit from 2009. On April 1, 2015, the China Development Bank issued another $5 billion loan to Petrobras for oil exploration activities (captured via Project ID#38170 and ID#52918).For loan and debt rescheduling records with variable interest rates, AidData calculates the all-in interest rate at T0 based on the reference rate (such as LIBOR or EURIBOR) on the loan start date, plus any known margin. Please see the methodology for additional details.
Sources & References
- 'BNDES chinês' vai financiar busca de petróleo no pré-sal
- US$ 10 bi da China para a Petrobras
- China
- Brazil Agree to $10 Billion Loan
- Exploration (Update3)
- O material jornalístico produzido pelo Estadão é protegido por lei. Para compartilhar este conteúdo, utilize o link:http://economia.estadao.com.br/noticias/geral,petrobras-negocia-novo-emprestimo-bilionario-na-china,62941e
- Petrobrás negocia novo empréstimo bilionário na China
- Noticiário na China anuncia empréstimo de US$ 10 bilhões do governo para Petrobras
- Bartering Globalization: China’s Commodity- backed Finance in Africa and Latin America
- Fabricante chinesa negocia acordo no Brasil
- The New Banks in Town: Chinese Finance in Latin America
- Chen Yuan: Sino-Brazilian Oil Cooperation Talks Hit an Impasse
- Petrobras 2009 20-F Annual Report SEC filing
- Petrobras Concludes China Deal
- Petrobras’s Gabrielli Says China Loan Won’t Be Backed by Crude
- Interview: Petrobras CEO José Sergio Gabrielli on Brazil's Energy Outlook
- Inside China
- Inc: China Development Bank’s Cross-Border Energy Deals
- Chinese 'Loan-for-Oil' Deals in Brazil
- Venezuela, and Ecuador: Local Concerns and Perceptions
- 巴西石油换来中国百亿美元贷款
- Petrobras quer atrair fornecedores de serviços da China
- Soft Power in China's Foreign Policy
- China: Brasil recibirá US$10.000m pacto petróleo por crédito
- Li Keqiang’s Latin America Trip: More
- Not Different
- Petrobras Turns to China for $10 Billion to Avert Crunch
- China
- Brazil Agree to $10 Billion Loan
- Exploration (Update3)
- China using loan packages to secure oil supplies
- China aposta na Petrobras
- 巴西国家石油公司获国开行百亿美元贷款
- China-Latin America Finance Database
- Rio de Janeiro
- November 4 2009
- Form 20-F 2009, (Rio de Janeiro
- May 19, 2009).
- Petrobras Signs $10 Billion Loan Deal with China
- China's Foreign Aid Activities in Africa
- Latin America, and Southeast Asia
- PETROBRAS-CHINA RELATIONS: TRADE
- INVESTMENTS
- INFRASTRUCTURE PROJECTS AND LOANS1 Loan applications and disbursements are still being received and processed as the projects continue to evolve. Ongoing monitoring and evaluation are in place to ensure project continuity.
All Grantees
Petróleo Brasileiro S.A. (Petrobras)
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