Reports carried by Fox Business indicated that the Export-Import Bank of the United States is to extend a $3 billion credit to finance Brazilian purchases of goods and services from American firms, announced the Export-Import Bank’s chief executive.
However, a majority of the funds (approximately two-thirds) will be given to Brazilian state owned oil and gas major, Petrobras, while the rest will go into infrastructure projects for the 2014 Soccer World Cup and the 2016 Summer Olympics, all to be held in Brazil.
The Export-Import Bank Chairman and President Fred P. Hochberg discussed the credit during the Brazil-United States business forum held in Sao Paulo. Despite Brazil being one of the nine priority recipients of Export-Import Bank credits together with Colombia, Mexico, India, China, Indonesia, Turkey, Nigeria and South Africa, the resources allotted to Latin America’s largest economy were those that grew the least, said Fox Business.
Hochberg is part of the delegation that travelled to Brazil with U.S. President Barack Obama. The business forum was attended by Brazilian and US CEOs, and discussed bilateral trade between the two countries. Currently, Brazil has an $8 billion annual trade deficit with the U.S. The forum was aimed at encouraging investments in Brazil, with a showcasing of investment opportunities in the fields of utilities, oil, telecommunications, airports, railroads and biofuels.
Petrobras will get $2 billion out of the credit funds, for the development of Brazil’s offshore oil fields. The Export-Import Bank has previously provided funding to facilitate U.S. exports of goods and services to Brazil. In 2009, Petrobras signed a letter of intent with the Export-Import Bank on a $10 billion financing package, reported the Wall Street Journal separately.
According to the Wall Street Journal, the U.S. is a key export market for Brazilian crude oil, and output is expected to soar as the pre-salt reserves are developed. Brazil’s vast pre-salt oil and natural-gas reserves lie beneath two kilometers of the Atlantic Ocean and a farther five kilometers below sand, rock and a shifting layer of salt. The pre-salt areas are estimated to hold between 50 billion and 100 billion barrels of oil, enough to turn Brazil into one of the world’s top five producers of crude oil.
The credit announcement follows US President Barack Obama’s visit to Brazil in which he has sought to increase Brazilian business for US companies. Brazil’s recently discovered oil reserves along its coast potentially amount to twice the US’ oil reserves.