RIO DE JANEIRO • Brazil's state-run oil company Petroleo Brasileiro, or Petrobras, said on Friday it had agreed on the terms of a deal to obtain US$10 billion (S$14 billion) in financing from China Development Bank (CDB).
Petrobras, the world's most indebted oil company, said in a securities filing the agreement included supplying Chinese companies with fuel, similar to a deal reached in 2009.
That year, Petrobras secured a loan of US$10 billion from the Chinese bank in return for oil supply.
Under the deal, Brazil guaranteed the supply of 200,000 barrels of oil a day to China's state oil firm Sinopec for the next 10 years.
Petrobras has plans to sell about US$14 billion of assets this year in an attempt to cut its US$130 billion debt and maintain cash amid a plunge in world oil prices and a massive corruption scandal at the company. President Dilma Rousseff said on Jan 15 the government did not rule out injecting new capital into the embattled oil company.
A kickback scheme that overcharged Petrobras for projects to later siphon some of that money to political parties has dragged down the company's shares and raised doubts about its management.
The loan from China to Brazil's Petrobras is for US$5 billion to US$10 billion, and can be paid in cash or oil at China's request.
It may help pay the bulk of the US$12 billion in debt the state-run oil company must repay this year.
The loan from the CDB was first agreed to early last year, and when added to a US$5 billion CDB loan made in 2009, increases the bank's debt exposure to Petrobras to as much as US$15 billion.
Reports also said that Petrobras will cut its 2016 to 2020 investment plan by 5 per cent to US$93 billion as the company contends with dwindling oil prices and the investigation into the graft case, the O Globo newspaper reported on Jan 31.
The troubled company could reduce its investments even further if a series of planned debt-reducing asset sales are completed, the paper reported without citing sources.