Brazil’s Petrobras tightens ties with Chinese banks

Brazil’s state-run oil company Petrobras is tightening its financial ties with China. 

The federal oil giant's actions in this area have gathered momentum since the beginning of 2023, when President Luiz Inácio Lula da Silva assumed the country's presidency. 

Last year, Petrobras signed MOUs with China Development Bank (CDB) and Bank of China to assess investment opportunities and cooperation in low carbon initiatives and green finance. 

The deals also call for financing Petrobras' supply chain and increasing and facilitating trade and financial exchanges between Petrobras and Chinese companies.

Last week, the company announced it had signed an MOU with China’s export credit agency Sinosure, with the same goals. 

The deal with Sinosure followed a series of agreements inked with Chinese companies such as China Petrochemical Corporation (Sinopec), China National Offshore Oil Corporation (CNOOC), China Energy International Group and Citic Construction Co. (CITIC). 

Energy sector relations between Brazil and China were expected to improve under Lula, after diplomatic relations deteriorated during the administration of former president Jair Bolsonaro.

During Lula's trip to China in April 2023, several government and business-level energy agreements were formalized, including in the electric power sector, with Chinese companies like State-Grid and SPIC.    

Partners of key Petrobras projects in the pre-salt, such as the Mero and Búzios fields, the Chinese increased their local exploration and production (E&P) footprint by acquiring assets in the Pelotas basin in December 2023.   

The Asian nation is also a major builder of FPSOs for Petrobras through its Cosco and CIMC Raffles shipyards, for example. 

The new deals with Chinese banks could help Petrobras improve financing conditions for the construction of FPSOs, while the state-run firm also seeks domestic solutions, such as the merchant marine fund (FMM).