Completed Mixed AidData Chinese Aid

CDB provides $10 billion line of credit to Petrobras to help meet repayment obligations (Linked to Record ID#53068 and ID#59384)

$10M USD

Funder	China Development Bank (CDB)
Recipient Organization	Petróleo Brasileiro S.A. (Petrobras)
Country	Brazil
Start Date	Jan 01, 2016
End Date	Dec 19, 2030
Duration	5,466 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`53067`

Grant Description

CDB provides $10 billion line of credit to Petrobras to help meet repayment obligations On February 26, 2016, Petroleo Brasileiro S.A. (Petrobras) and China Development Bank (CDB) signed a term sheet for a $10 billion line of credit (captured via Record ID#53067).

The line of credit was to be disbursed in two, $5 billion tranches (with 10-year maturities) and used by the borrower to address its maturing debt obligations.

Petrobras and CDB signed a $5 billion agreement for the first loan tranche on December 15, 2016 (captured via Record ID#53068). This loan tranche was disbursed on December 22, 2016.

Then, on December 14, 2017, Petrobras and CDB signed a $5 billion agreement for the second loan tranche (captured via Record ID#59384), which was fully disbursed in December 2017 and January 2018.

As a source of collateral for the first loan tranche, Petrobras signed oil-supply contracts with three Chinese companies [China National United Oil Corporation (a subsidiary of CNPC), China Zhenhua Oil Co. Ltd. (a subsidiary of NORINCO), and Chemchina Petrochemical Co. Ltd (a subsidiary of ChemChina)] on December 15, 2016.

Under each contract, Petrobras agreed to sell 100,000 barrels of oil per day for 10-years at market prices.

As a source of collateral for the second loan tranche, Petrobras signed an oil supply contract with UNIPEC Asia — Sinopec’s (subsidiary) trading company — and agreed to provide 100,000 barrels per day for 10-years at market prices. Petrobras reportedly repaid a small portion of the $10 billion debt between 2016 and 2018.

However, by the end of 2019, it had repaid $8 billion (including a $5 billion repayment on December 16, 2019).

📋 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.
Multiple sources indicate that the first tranche and the second tranche are fully disbursed. The first tranche was reportedly provided in two payments: a $3.5 billion payment and a $1.5 billion payment. The second tranche was reportedly provided in a $3 billion payment (on December 14, 2017) and a $2 billion payment (on January 26, 2018).
This project is not to be confused with projects #36767, #38170, and #52918, which record similar transaction amounts from CDB to Petrobras.

📚 Sources & References

China’s Global Energy Finance: Chinese Development Bank (CDB) and Export-Import Bank of China (Ex-Im) 2018
The Sustainable Infrastructure Finance of China Development Bank: Composition
Experience and Policy Implications
China Investment Research Vol 29 China Outbound Investments Q1 2016
Brazil's Petrobras to pre-pay Chinese loans, end oil supply obligation
China loan to Petrobras may help pay most 2016 debt: source
DEMONSTRAÇÕES CONTÁBEIS CONSOLIDADAS
China-Latin America Finance Database
Annual Report on FORM 20-F 2015
Petrobras inks US$10 billion Chinese finance deal
Petrobras Gets $10 Billion Chinese Loan in Oil Supply Deal
Egypt oil and gas newspaper
Brazil’s Petrobras To Sell Argentina Oil & Gas Assets
Why Brazil’s Oil Major Is Rapidly Paying Off Its Chinese Debt
Petrobras gets another US$5 billion loan from China Development Bank, 2015 Annual Report
PETROBRAS-CHINA RELATIONS: TRADE
INVESTMENTS
INFRASTRUCTURE PROJECTS AND LOANS1
Brazilian Petroleum Corporation – PETROBRAS 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.