Saturday, November 19, 2011

Obama Finances Brazilian Petrobras Oil Spill

The Brazilian government oil company Petrobras received $2 billion in loan guarantees for a massive underwater drilling project from the Obama administration.  On November 8th, reports slowly started to leak that Petrobras' deep water oil fields are suffering an oil spill. The reported spill quantity has been exponentially growing ever since.

The drilling contractor is Transocean – the owner of the infamous Deepwater Horizon rig.  The well is part of the Chevron-operated Frade project in the Campos Basin, located 3,800 feet (1,200 meters) underwater, 230 miles (370 kilometers) off the northeastern coast of Rio de Janeiro state. Chevron employs over 700 employees in Brazil with a 51.7 percent stake in production at Frade. Brazilian oil giant Petrobras has thirty percent, and Frade Japan Petroleum consortium is in charge of the remainder.

It is unclear if the oil rig used by Chevron in Brazil had been moved from the Gulf of Mexico. Diamond Offshore (DO), a driller, told Forbes in March 2011 that they only had five rigs in the Gulf of Mexico and had already moved three rig out last year because of the moratorium.(Barack Obama imposed a 7 year offshore drilling ban* of the Atlantic and Pacific coasts, Alaska and the Gulf of Mexico. ) One went to Africa. One went to Egypt. The other went to Brazil, where Diamond has an office  in Macaé, Rio de Janeiro.

It appears that Petrobras recieved a $308 million credit guarantee, of which JP Morgan is the lender, and the Export-Import Bank of the United States would be the guarantor of the loan. The credit was used by Petrobras to acquire drilling services and capital goods to dig for oil in the Santos Basin off the coast of Rio de Janeiro and Espirito Santos states.

At a March 19, 2011 business summit in Brasilia, Obama said: "At a time when we’ve been reminded how easily instability in other parts of the world can affect the price of oil, the United States could not be happier with the potential for a new, stable source of energy."  He did not mean banned domestic energy reserves which are four times as abundant as Brazilian reserves.

Obama appointee Fred P. Hochberg, current chairman and president Ex-Im Bank, declared that the bank approved the $2 billion preliminary loan underwriting to Petrobras "to encourage purchases of U.S. goods and services by Petrobras":
I chose Brazil as my first international destination for good reason: Brazil is a powerhouse among South American economies and offers tremendous opportunities for U.S. exporters in many sectors. I want Brazilians to know that Ex-Im Bank has the will and the capacity to finance their purchases of U.S. equipment, products and services.
Neither the Deepwater Horizon or this current dangerous deep water oil spill would likely have occurred if U.S. and Canadian on-shore oil reserves and pipelines were not banned and restricted. The bans and restrictions are purely for "green," crony capitalist, political donors who are pillaging the American people. According to Peter Schweizer's new Book Throw Them All Out, for every dollar members of Obama’s national finance committee raised, they received $24,783 in return in the form of DOE sweetheart loans, on average.

Notes and Updates

*December 1, 2010 - Effectively reinstated the ban on offshore drilling, placing the entire Pacific Coast, the entire Atlantic Coast, the Eastern Gulf and parts of Alaska off limits to future energy production until 2017 at the earliest.

November 8, 2011 - Announces a new draft 2012-2017 lease plan that closes the majority of the OCS to new energy production. The draft plan prohibits new offshore drilling and only allows lease sales to occur in areas that are already open. It includes lease sales in the Western Gulf of Mexico and Alaska - leaving portions of the Arctic and the entire Atlantic and Pacific Coasts off-limits to new energy production and job creation.

UPDATE: President Obama’s United States Department of Agriculture has delayed shale gas drilling in Ohio for up to six months by cancelling a mineral lease auction for Wayne National Forest (WNF). The move was taken in deference to environmentalists, on the pretext of studying the effects of hydraulic fracturing, killing 200,000 jobs!


Dean said...

I'm finding that Obama is rather a type of NIMBY crony capitalist. He don't mind himself drilling just as long as it isn't in our waters.

K T Cat said...

Huh? We're borrowing money from the Chinese to loan it to the Brazilians? What?

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