US Ready to Lend Brazil US$ 10 Billion for Oil Exploration

Oil rig offshore in Brazil Brazil's Planning Minister Paulo Bernardo da Silva revealed that the United States is prepared to provide up to US$ 10 billion in loans to finance the development of massive hydrocarbon reserves off Brazil's coast.

President Barack Obama's national security adviser, General James Jones, discussed the matter with officials this week during a visit to Brazil. He said the US Export-Import Bank already has signed a letter of intent in that regard with Brazilian state oil company Petrobras.

The loan is equal in value to a similar credit line agreed to with the China Development Bank, also for exploiting Brazil's "pre-salt" area, so-named because the estimated 80 billion barrels of high-quality crude in that new oil frontier lie far beneath the ocean floor under layers of rock and an unstable salt formation.

Under the agreement with the Chinese state bank, finalized during Brazilian President Luiz Inácio Lula da Silva's visit to Beijing in May, Brazil can repay the loan facility with oil as opposed to cash.

According to the government's projections, the pre-salt reserves – located at a depth of up to seven kilometers below the ocean surface in an 800-kilometer by 200-kilometer area – could eventually lead to a nearly six-fold increase in Brazil's current proven reserves of 14 billion barrels and transform that nation into one of the world's 10 largest oil producers and a major crude exporter.

Petrobras plans to invest close to US$ 29 billion through 2013 to develop the pre-salt deposits in which the company already holds concession rights. Petrobras is projecting that some 1.3 million barrels per day can be extracted by 2013 from the pre-salt fields and 1.8 million bpd by 2020.

The Tupi field, which is believed to contain between 5 billion and 8 billion barrels of oil and was the first to be exploited in the pre-salt region, is considered to be the largest hydrocarbon discovery in the Americas in the past 30 years. Other large oil and natural gas fields were later found nearby, also under a thick bed of salt.

But Brazil has been forced to seek external financing because the fields pose an enormous technical and financial challenge due to the depth and thickness of the salt and the drastic changes in temperature as the oil is brought to the surface.

Acknowledging that Petrobras alone is not capable of developing the massive pre-salt reserves, Brazil announced in May that it will invite international oil companies to bid for concessions in that region beginning next year.

The country had previously halted the sale of concessions after the massive finds were made. Petrobras, an integrated energy company and the global leader in deepwater oil exploration and production, operates in 27 countries in the Americas, Africa, Asia and Europe.

Shares of Petrobras, Brazil's largest corporation, trade on the Sao Paulo, New York, Madrid and Buenos Aires stock exchanges, but the Brazilian government retains control through a golden share.



  • Show Comments (12)

  • João da Silva

    Llyod Cata
    [quote]Bravo Joao da Silva [/quote]

    Well, it is a very pleasant surprise to hear from you again after a long time, Dr.Cata. I am sure that every fellow blogger in this site will join me in giving you warm abraÀƒ§os and welcome you back. Many historical and revolutionary changes have taken place in the Americas since our last encounter. The first is the “Regime Change” in Washington followed by constitutional changes in Venezuela and Bolivia to guarantee the continuity of the leftist dynasties in those countries, all closely watched and fully approved by the “Greatest Revolutionary of all time”. However, there seemed to be a [i][b]minor [/b][/i]set back in his master plans in Honduras a month ago, but it is a question of time before Dr.Zelaya is restored into power.

    Of course, there are some alarming events in Colombia, Ecuador, etc; where the meddling by the “outside forces” is evident, but I am sure these forces will be defeated by “El Commandante Jr.” in Caracas with Russian weapons and Chinese Frozen food, and the moral support from our fearless leader in Havana.

    In general the situation looks very good for the peoples of the Americas, with or without Oil. It has been an uphill task for our fragile and ailing leader. But comrades like you and me Wish the “Greatest Revolutionary of all time” Dr.Fidel Castro a HAPPY BIRTHDAY AND MANY MORE. May he live long to see the Bolivarian revolution enveloping the entire Americas.

  • Lloyd Cata

    Money, Oil, & Revolution
    Bravo Joao da Silva
    US ‘cannot’ allow Chinese to influence the ‘Brazillian’ energy sector. $10 billion to match China is just to get a seat at the table(ante). Bush also pushed investment in Brazil bio-fuels. Whether Brazil can keep its energy profits and use those profits for a better society is the question. Everything else is capitalist games. Possibly this arena will prove who is the best capitalists between the US and China; understanding that the US has the lead with a large capitalist infrastructure already in Brazil for many decades. However, the Chinese enter the picture without ‘dirty hands’ of previous corrupt Brazillian administrations.
    How this plays out eventually will decide how much prosperity is realised by the Brazillian people. The US capitalists have a very poor track record in this regard so there is a good chance that the Chinese could win this game. The US will not be beat in the corruption aspect of the deal. US money can flow through Brazillian society even better than it can in Mexico. The Chinese can only influence those politicians and corporations that are unwilling to enrich themselves at the expense of the people.
    It should be very enlightening for everyone to see what happens with this oil. Hopefully it will not go the way of the minerals sector. I’m sure all intellects on all sides are watching closely. None more than the greatest revolutionary of all time, Fidel Castro; HAPPY BIRTHDAY, AND MANY MORE!!!

  • João da Silva

    [quote]Castro turns 83 on Thursday./quote]

    Lets all wish him many many happy returns of the day.


    next chaves and then lula and mr M and the big O
    Cubans accustomed to hours-long speeches, thousand-word essays and lengthy interviews can now get Fidel Castro at a glance, thanks to a new dictionary of El Comandante’s teachings.

    “Unemployment” and “History” are among the myriad words for which the 339-page paperback provides definitions À¢€” based on snippets of speeches, columns and statements dispensed by Castro during the 49 years he governed the communist-run island.

    The publication, which the government says is meant to provide guidance to Cuban thinkers, calls to mind the “Little Red Book” of the late Chinese communist leader, Chairman Mao Zedong.

    Unlike the Chinese book, however, the Cuban dictionary with the reddish-brown cover and the photo of an elderly Castro in suit and tie is not small enough À¢€” yet À¢€” to stuff into one’s back pocket.

    Presented to the public on Saturday, the work was compiled by Salomon Susi Sarfati, an oratory analyst at the Cuban Communist Party’s high ideological school.

    Castro turns 83 on Thursday. He hasn’t been seen in public for three years, but publishes in state media frequent musings on mostly international issues, including the long-standing conflict with the United

  • Jacque Bauer

    Let me get this straight. The US is now trillions in debt with tens of trillions of debt in Obama’s medium range plan. The US is energy short and dependent on the likes of Chavez and Middle East tyrants, although they have billions of barrels of stranded oil reserves in their OCS and Alaska. The US is also suffering their worst recession “since the Great Depression” with about 15 % unemployment (official unemployment plus those who have given up after being out of work for over a year). Therefore, don’t use your own money to explore for and produce your own reserves and employ your own people. Instead, give that money to other countries to do the same thing. Brilliant – the type of Obama logic that is destroying this once great country.

  • Rockefeller

    has already came up “dry” in more than one supposed field.


    The last line of this is the biggest joke all day
    7, 2009

    The Brazilian government will maintain full control of key offshore oil fields, hiring state-run energy company Petroleo Brasileiro S/A to lead exploration and development efforts, local business daily Valor Economico reported Friday.

    Presidential Chief of Staff Dilma Rousseff also told Valor that the National Petroleum Agency, or ANP, the lead oil regulator, will drill exploration wells in offshore acreage held by the government. The ANP has 1 billion Brazilian reals ($546 million) in cash, enough to drill four wells, she said.

    The idea, according to Rousseff, is to find gigantic oil fields and then keep those fields exclusively under government control, and out of the concessions process.

    “The government could reserve fields where there’s a certainty of large reserves for direct exploration, contracting Petrobras as operator,” Rousseff told Valor, referring to Petroleo Brasileiro. “In this case, there would be no concession auction.”

    Other fields would be evaluated on a case-by-case basis to determine a minimum level of oil that would be kept by the government under production-sharing agreements. Operation of the fields would be auctioned off, with the winner being the company that promised the largest share of production to the government.

    Rousseff dismissed any chance that the changes to Brazil’s concession system would have a chilling effect on private investment.

    “In the world, a field with estimated reserves of 500 million barrels is considered gigantic. Here, at Tupi, we have reserves estimated at between 5 billion and 8 billion barrels. The potential is very promising,” Rousseff said.

    “We know it. Investors and large oil companies know it. This is the only large oil discovery in the world in the past few years; there isn’t any other,” Rousseff added.

    On Wednesday, a government panel formed by President Luiz Inacio Lula da Silva submitted proposed changes to Brazil’s oil legislation. The changes are aimed at giving the government a greater stake in recently discovered offshore oil reserves.

    The so-called subsalt discoveries were made under a thick layer of salt in the Santos Basin off the coast of Sao Paulo and Rio de Janeiro states. The oil lies under more than 2,000 meters of water and a further 5,000 meters under sand, rock and a shifting layer of salt.

    In November 2007, Petrobras shocked the oil industry when it estimated recoverable reserves at the Tupi field were between 5 billion and 8 billion barrels of oil equivalent, or BOE. That was the largest discovery in the Americas in more than 30 years.

    Lula wants to maximize the government’s take from the possibly massive reserves, using the proceeds to help end poverty and improve education in South America’s largest country

  • Greenspan

    [quote]written by titan, August 07, 2009
    So the US is ready to loan Brazil US$10 billion with Chinese funds?

    That makes go Hmmmm [/quote]

    [quote]He said the US Export-Import Bank already has signed a letter of intent in that regard with Brazilian state oil company Petrobras. [/quote]

    Hmmmmm? Take your finger out of your ass Titan. Does that sound like “Chinese Funds”?

    Hurry up and go get ready. The short bus arrives early. 😀

  • João da Silva



    Allen, 1 & 2: Would you mind stopping to imitate our agent in Geneve? He has short fuse and is sure to come out with a long winded reply. You guys are playing with [i][b]Feur[/b][/i]. 😉

  • titan

    So the US is ready to loan Brazil US$10 billion with Chinese funds?

    That makes go Hmmmm

  • GreenspaM Two

    1) Never ever trust a Brazilian !
    2) Brazil Government is obviously not going to take the risk…with their US$ 215 billion in foreign currencies reserves.

    Ohhhhh funny that now their Tupi field 5 years investments will be US$ 29 billion ! Until recently it was much much more than that.

    Conclusion : the 200 millions Brazilians are 100’000’000 % sure that an additional 1,8 millions barrels per day…eventually…will change their future very much positively. And that their eventual 50-80-100 billion barrels in the Tupi fields is HUUUUUGGGGE !
    Just look at Venezuela. They have NOW over 170 billion barrels of proven reserves. Or twice the futur POTENTIAL of Brazil.
    Does that make their country WEALTHY ?

    VIVA the Brazilian POPULISM ! Viva the South America POPULISM.
    They cant live….WITHOUT IT.
    They would have a mental depression…WITHOUT POPULISM !

    😉 😉 😉 😉 😉 😉 😉

  • Greenspan

    why does Petrobras need foreign loans when Brazil has 200B in foreign reserves? When Brazil is “telling the IMF” what to do?

    I’m confused.


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