China to lend Petrobas $10 billion to secure future oil supplies

19 February 2009

A day after signing a $25-billion loan-for-oil deal with its former rival Russia, China has moved across swiftly  to the Latin American continent, to secure future oil supplies by negotiating a $10 billion loan-for-oil deal with Brazilian oil giant, Petrobas.

Brazilian newspaper O Estado de S.Paulo daily, said that Petrobas was holding talks with China state-owned China Development Bank to finalise a deal, where the Chinese bank would lend $10 billion at low interest rates in return for guaranteed oil supplies in the future.

China Development Bank had inked a similar deal just two days back with Russian oil companies in a loan-for-oil deal where Russia would supply 300,000 barrels a day for the next 20 years in return for $25 billion loan at 6 per cent interest. (See: China, Russia sign $25-billion loan-for-oil deal)

The paper also said that the Chinese vice president Xi Jinping would be visiting Brazil today to take part in the negotiations and the deal will be announced when Brazilian President Luiz Inacio Lula da Silva is scheduled to visit China in May.

Brazilian state-run oil company, Petrobras said in the beginning of the week that it was negotiating with three to four oil consuming nations on a possible deal where it can secure loans for financing its exploration costs in return for guaranteed oil supplies in the future.

Speaking at an event in Sao Paulo, Petrobras CEO Jose Sergio Gabrielli said "We're not making anticipatory sales. We are discussing the possibility of guaranteeing supply, given future market conditions where some countries consider this of strategic value, and could be interested in discussing possible financing."