Brazil Min: China, Petrobras In Talks On $10 Billion Loan - Report

Discussion in 'Current Events' started by chloe, Dec 8, 2008.

  1. chloe

    chloe Guest

    Monday December 8th, 2008

    RIO DE JANEIRO -(Dow Jones)- Brazilian state-run energy giant Petroleo Brasileiro (PBR) is in negotiations with the Chinese government for a $10 billion loan to finance development of promising subsalt oil deposits, the country's mines and energy minister told the Folha de Sao Paulo newspaper.
    In a report published Monday, Mines and Energy Minister Edison Lobao said that "China is offering Petrobras $10 billion to start."
    Lobao also said Brazil's government could use $200 billion in foreign reserves to finance Petrobras' investment plans.
    Previously, Lobao said a sovereign wealth fund from the United Arab Emirates was also interested in financing Petrobras' investments. The talks with that fund and China were ongoing, he said.
    The financing deals could help Petrobras overcome a tight credit market and falling international oil prices, which experts and analysts have speculated could slow down development of the subsalt reserves. Full development of the region has been estimated to cost as much as $600 billion.
    Current oil prices, however, haven't yet reached a level that would make subsalt development unfeasible, Lobao said. He pegged $30 a barrel as the floor price for subsalt reserves to be economically viable.
    Light sweet crude for January delivery was trading higher Monday at $42.83 a barrel as of 1215 GMT, bouncing back from the four-year low registered Friday.
    Lobao also told the newspaper that a government panel studying possible changes to Brazil's oil legislation would likely submit its proposal to President Luiz Inacio Lula da Silva next week.
    According to Lobao, the country will likely adopt a model similar to Norway's oil-production sharing agreement.

    Lula has pledged to use proceeds from the subsalt oil deposits to ease the country's crushing poverty and improve the education system.

    Brazil Min: China, Petrobras In Talks On $10 Billion Loan - Report - EasyBourse actualité

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