Completed Mixed AidData Chinese Aid

China Development Bank provides $10 billion loan for oil exploration in the Santos Basin

$10M USD

Funder	China Development Bank (CDB)
Recipient Organization	Petróleo Brasileiro S.A. (Petrobras)
Country	Brazil
Start Date	Nov 03, 2009
End Date	Nov 18, 2026
Duration	6,224 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`38420`

Grant Description

China Development Bank provides $10 billion loan for oil exploration in the Santos Basin On November 3, 2009, the China Development Bank (CDB) and Petroleo Brasileiro S.A.(Petrobras) signed a $10 billion facilities agreement for the exploration of the Santos Basin pre-salt oil fields.

📋 Loan / Grant Terms

💰 Loan Amountcarried a 10-year maturity and an annual interest rate of LIBOR plus a 2

📅 Maturity10 years

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, the borrower had drawn down $3 billion under the facilities agreement.

Then, on February 10, 2010, Petrobras withdrew an additional $2 billion under the facilities agreement. The borrower ultimately drew down $7 billion in total under the facilities agreement. The principal amount outstanding ($2.8 billion) under the credit line was repaid in full on January 30, 2018. 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, a borrower, and oil seller, and an oil buyer (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.
The account charge agreements and assignment of receivables agreement that underpin the borrowing arrangement between Petrobras and CDB can be accessed via https://www.dropbox.com/s/fb82y6zn1cwn6ym/3%20November%202009%20Petrobras%20CDB%20Account%20Charge%20Agreement%201.pdf?dl=0 and https://www.dropbox.com/s/0gat12162p7wnnt/3%20November%202009%20Petrobras%20CDB%20Account%20Charge%20Agreement%202.pdf?dl=0 and https://www.dropbox.com/s/pnsito7jq20vsi2/Assignment%20of%20receivables%20agreement%20for%20Petrobras%20CDB%20loan.pdf?dl=0.
On April 1, 2015, the China Development Bank issued another $5 billion loan to Petrobras for oil exploration activities (as captured via Project ID#38170 and ID#52918).
Some sources indicate that the term facility agreements (subsidiary loan agreements) -- issued through the $10 billion line of credit -- were signed on May 19, 2009. This issue warrants further investigation.
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, (Rio de Janeiro
May 19, 2009).
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the fiscal year ended December 31, 2009
Assignment of Receivables Agreement for Petrobas CDB Loan
Bartering Globalization: China’s Commodity- backed Finance in Africa and Latin America
Chen Yuan: Sino-Brazilian Oil Cooperation Talks Hit an Impasse
China aposta na Petrobras
China investe pesado no Brasil
China using loan packages to secure oil supplies
China's Foreign Aid Activities in Africa
Latin America, and Southeast Asia
China
Brazil Agree to $10 Billion Loan
Exploration (Update3)
China
Brazil Agree to $10 Billion Loan
Exploration (Update3)
China-Latin America Finance Database
China: Brasil recibirá US$10.000m pacto petróleo por crédito
Chinese 'Loan-for-Oil' Deals in Brazil
Venezuela, and Ecuador: Local Concerns and Perceptions
Demonstracoes Financeiras 2018
Fabricante chinesa negocia acordo no Brasil, financial statements, financial statements 2011
Form 20-F 2009, form 20k 2018
Inside China
Inc: China Development Bank’s Cross-Border Energy Deals
Interview: Petrobras CEO José Sergio Gabrielli on Brazil's Energy Outlook
JOINT ACTION PLAN BETWEEN THE GOVERNMENT OF THE PEOPLE'S REPUBLIC OF CHINA AND THE GOVERNMENT OF THE FEDERATIVE REPUBLIC OF BRAZIL, 2010-2014
Li Keqiang’s Latin America Trip: More
Not Different
Noticiário na China anuncia empréstimo de US$ 10 bilhões do governo para Petrobras
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
Petrobas CDB Account Charge Agreement
Petrobas CDB Account Charge Agreement 2
Petrobras 2009 20-F Annual Report SEC filing
Petrobras Concludes China Deal
Petrobras Deepens China Tie With $3.5 Billion Loan Deal
Petrobras gets 10 bln dollar loan from Chinese bank
Petrobras negocia empréstimo de US$ 10 bilhões com banco chinês
Petrobras quer atrair fornecedores de serviços da China
Petrobras Signs $10 Billion Loan Deal with China
Petrobras Turns to China for $10 Billion to Avert Crunch
PETROBRAS-CHINA RELATIONS: TRADE
INVESTMENTS
INFRASTRUCTURE PROJECTS AND LOANS1
Petrobras’s Gabrielli Says China Loan Won’t Be Backed by Crude
Petrobrás negocia novo empréstimo bilionário na China
Rio de Janeiro
November 4 2009
Soft Power in China's Foreign Policy
The New Banks in Town: Chinese Finance in Latin America
US$ 10 bi da China para a Petrobras
中华人民共和国政府与巴西联邦共和国政府2010年至2014年共同行动计划
中巴签百亿美元贷款换石油协议
巴西国家石油公司获国开行百亿美元贷款
巴西石油换来中国百亿美元贷款 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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