The state-run oil company of Brazil, Petroleo Brasileiro SA has entered a strategic agreement on Saturday with the China Development Bank. With the help of this agreement, they can explore opportunities in the financial market of China as reported by Valor, Economico newspaper.
This wide ranging cooperation agreement was signed when Michel Temer, the Brazilian President visited Beijing. This agreement would allow Petrobras to easily seek new options of financing from China and it would easily make use of the second half of the credit line of $10 Billion, which was open last year by the China Development Bank. This credit line was guaranteed by the oil exports by Brazil, added Valor.
The state-run oil company was unavailable for comment immediately. Petrobras is one of those companies that is highly indebted. In fact, it is the most indebted oil producer in the world. In December, the oil company had to borrow the initial $5 Billion in a 10 year loan, which can either be paid in cash or oil depending upon the Chinese government’s request. The oil company still has $5 Billion credit left, which can be used for other financial prospects to earn the company some kind of stability.
As Petrobras is the most indebted oil producer, it was forced to sell most of its assets earlier this year. It also had to slash their spending as it recovered from the oil price plunges and the giant price-fixing scandal. The price fixing scandal also had political kick-backs and bribery allegations, which is why it has been difficult for the company to make its name back.
With this move, it is hoped that Petroleo Brasileiro SA is going to survive the repetitive blows to its reputation.