Petrobras Strikes Chinese Deal To Get $5B Funding, Supply Oil

Brazil’s state-owned energy giant Petrobras said on Thursday that it had signed the final terms of a US$5-billion financing agreement with a Chinese bank and a deal to supply 100,000 bpd of oil to several Chinese companies.

Petrobras has entered into a 10-year financing deal with China Development Bank Corp and will be selling over a period of 10 years a total volume of 100,000 bpd to China National United Oil Corporation, China Zhenhua Oil Co. Ltd, and Chemchina Petrochemical Co. Ltd, subject to market conditions.

Petrobras, which has been struggling with a huge debt and a corruption scandal, is seeking stable revenues for the future.

Earlier this week, Brazil’s oil company said that its domestic oil production increased by 2 percent on the month in November, to 2.23 million barrels of oil equivalent daily. Total global production stood at 2.86 million bpoed, the company added.

Earlier this month, Petrobras reiterated its plans to sell US$4 billion worth of assets by the end of 2016, adding that it will also meet its divestment target for 2015 and 2016, which stands at US$15.1 billion. However, to date, it has reported sales worth only US$10.7 billion, with all but five deals suspended by the federal auditing court of Brazil. These five assets, according to Petrobras, will bring in some US$3.3 billion in proceeds.

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In September of this year, Petrobras said it would be spending US$74.1 billion over the next five years—a 25-percent reduction on the capex of US$98.4 billion for the previous five years. This is also the company’s lowest five-year budget since 2006. The figure missed consensus analyst estimates of US$82.7 billion as well.

In addition to the budget cut, Petrobras said back in September that it still planned to generate another US$19.5 billion from asset sales and partnerships in the next two years.

By Tsvetana Paraskova for Oilprice.com

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