FRONT PAGE CONTRIBUTOR
Obama Administration Bankrolls Brazilian Oil Company to the Tune of $10 Billion
Tudo que voc? sabe est? errado.
Petrobras, the Brazilian oil giant, has discovered world-class oil fields, estimated to contain in aggregate some 80 billion barrels of oil, in the deepwater offshore Brazil. Developing the reserve will be expensive, as the deposits are located beneath 2,000m (6,600 ft) of water and 5,000m (16,400 ft) of sediment, including a thick layer of salt. The company plans to spend $29 billion through 2013 to develop the portion of the “pre-salt” basin it already controls.
Financing? No problem. The Obama Administration, through the U.S. Export-Import Bank, has agreed to provide up to $10 billion in loans to Petrobras to help pay for the development, according to Brazilian Planning Minister Paulo Bernardo da Silva. The China Development Bank has agreed to supply a similar credit line, repayable in barrels of oil in lieu of cash.
When a lender structures a loan to be repaid in barrels, it represents a speculation on the price of oil as well as a bet on being repaid.
The Brazilian government is the controlling shareholder of Petrobras, but shares trade on several exchanges, including New York (symbol PZE). The company operates in 27 foreign countries, including the U.S. in the Gulf of Mexico.
Which begs the question: Why is the American President willing to risk $10 billion on the success of a Brazilian oil venture, while giving every signal that he wishes the American independent producer would just shrivel up and die?
Is it because we vote Republican?
H/T Kari Scott, CRC Public Relations