(Global Trade Review, London, 12 February 2025) The Export and Investment Fund of Denmark (EIFO) reflected on lessons from the collapse of a nickel mining project in Brazil, which faced soaring costs and plunging prices. Despite some financial exposure, EIFO says the experience will shape its approach to future commodity deals, particularly in critical minerals.
Brazil
Meteoric maintains Caldeira momentum in bid to build low cost rare earths monster
Stockhead, Perth, |24 February) Meteoric Resources continues advancing its Caldeira project in Brazil, projecting industry-leading low operating costs and high potential returns. Despite a dip in share price, the company plans to finalize its pre-feasibility study soon and aims for production by 2027. Strategic partnerships, including agreements with U.S. and Canadian ECAs, are key to securing future funding.
Brazil’s Petrobras tightens ties with Chinese banks and Sinosure
[BNAMERICAS, Santiago, 10 June 2024) 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. 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).
Scottish firms win in 1st UKEF deal for oil & gas de-re?-commissioning
(UKEF, London, 1 May 2024) UK Export Finance (UKEF) has closed its first ever transaction supporting overseas oil and gas decommissioning, securing finance for a major contract which benefits over 70 Scottish firms. The export credit agency has issued a $7.5 million guarantee which allows Brazilian contractor Ocyan to secure financing from ABC International Bank plc for new equipment from Scottish business Maritime Developments Ltd (MDL). However in another online article, it turns out that this contract could be to remove old pipelines so as to re-commission idle oil rigs! UKEF does not name the rigs to be decommissioned. Yahoo Finance notes that “The contract [with Ocyan] will help Petrobras maintain a reliable supply of natural gas to its customers. The revitalized pipelines [eg Jorge Mitidieri and Renato Duque] will be able to transport additional gas, which will help meet the growing demand for natural gas in Brazil. Cost Savings: The deal will also help Petrobras in reducing costs. The new [recommissioned] pipelines will be more efficient than the old ones, which will help PBR save money on energy costs.” It is not clear whether the decommissioned rigs are to be revamped or abandoned. Brazil is home to over 25% of the global FPSO fleets. At any rate, Brazil is clearly not leaving the offshore oil/gas rig industry thanks to UKEF, as implied by their press release.
International lawyers advise ECA and international lenders in Latin American finance
(Latinvex, Miami, 24 April 2024) Milbank represented a consortium of export credit agencies and international lenders in connection with the $2.5 billion project financing for the $4.5 billion expansion of the Centinela copper mine in Chile and Mexican lending company MNJ Capital on a $500 million secured credit facility; Clifford Chance advised the lenders on a $500 million secured loan to Colombian investment manager Grupo SURA; Cleary Gottlieb represented Mexican glassmaker Vitro in a $100 million term loan with Netherlands-based ING Bank; Simpson Thacher represented Brazilian technology platform Brandlovrs Inc. in connection with an equity investment round led by Brazilian venture capital firm Kaszek and Arnold & Porter advised Canada-based Vela Industries Group in the acquisition of Chile-based fleet management, machine performance, and telematics software and hardware provider Samtech. Norton Rose Fulbright advises lenders on ECA-backed financing for two new LNG-powered ‘World Class’ cruise vessels for MSC Cruises.
The BRICS come of age [But what role for ECAs?]
(Project Syndicate, Cairo, 18 August 2023) by Hippolyte Fofack, Chief Economist and Director of Research at the African Export-Import Bank (Afreximbank). Given the BRICS’ economic success, more than 40 countries have shown an interest in joining the group and 22 have formally applied for membership. Expansion, trade and investment facilitation will be high on the agenda of the group’s summit scheduled for August 22-24 in Johannesburg. They include many issues on which the bloc’s views diverge from those of the G7, such as sustainable development, global governance reform (especially reform of the IMF), and de-dollarization. An enlarged grouping could deepen trade and settlement in local currencies, accelerate de-dollarization, and lead the transition to a more multipolar world. The economic potential of Brazil, Russia, India, and China, the group – called the BRICS since the addition of South Africa – contributes more to global GDP (in purchasing-power-parity terms) than the G7. Since 2014, Russia’s trade with G7 countries has fallen by more than 36%, owing to unprecedented Western sanctions, while its trade with the other BRICS has increased by more than 121%. The International Monetary Fund forecasts that China and India alone will generate about half of global growth this year. With geopolitical tensions running high, and the weaponization of the dollar for national-security purposes continuing to escalate, the BRICS have taken on new significance, offering trade diversion and other relief to weaken the effectiveness of sanctions and fast-tracking the transition to a multipolar world. Read the Summit Declaration here.
Who are the major financiers of Brazilian FPSOs?
(BN Americas, Santiago, 7 July 2023) Although the energy transition and ESG issues are gaining traction, many banks and credit export entities keep financing oil and gas undertakings, such as floating production storage and offloading units (FPSOs) ordered by Brazil’s federal oil firm Petrobras. FPSOs are used for the production and processing of hydrocarbons, and for the storage of oil. This situation will not change much as demand for hydrocarbons will remain and a significant portion of oil companies’ decarbonization capital expenses comes from oil and gas revenues. Furthermore, the geopolitical context, with the war in Ukraine and gas supply in Europe, has reignited energy security concerns. Meanwhile, financial products like green and sustainability linked bonds, developed to support companies that do not operate in totally green areas, do not yield higher returns. According to Daniela Davila, a partner at Vieira Rezende law firm, new FPSOs are mainly financed by Asian financial institutions (banks and leasing houses) and export credit agencies from countries such as China, Japan, South Korea and Singapore, where shipyards that build the hulls/modules of the units are located. Some banks, such as BNP Paribas and HSBC, have announced their exit from this industry, while New York-based Nordea has shown less appetite for oil and gas. On the other hand, traditional offshore players like Norway’s DNB or Germany’s Deutsche Bank continue to support the sector. CNOOC and CNODC are also Petrobras’ partners in the Mero field, which will receive the Sepetiba unit this year and Alexandre de Gusmão in 2025. Banks from Japan, like Sumitomo Mitsui Banking Corporation and Japan Bank for International Corporation, often work with Japan’s Modec, which signed several charter contracts of FPSOs under construction with Petrobras and one for Equinor’s Bacalhau field. Among other financial institutions with tradition in FPSO financing are the UK’s Standard Chartered Bank; DBS Bank, United Overseas Bank, Clifford Capital and Oversea-Chinese Banking Corporation from Singapore; China Investment Corporation; Korea Development Bank (South Korea); Maybank and CIMB (Malaysia); Société Générale and Natixis (France); and Mitsubishi UFJ Financial Group (Japan). Export credit agencies in the sector include China’s Sinosure, Nippon Export and Investment Insurance (Japan) and Sace (Italy).
SBM Offshore completes US$1.615 billion financing of Alexandre de Gusmão offshore Brazil FPSO
(Yahoo Finance, Brazil, 20 June 2023) SBM Offshore is pleased to announce it has signed the project financing of its floating production storage and offloading unit (FPSO) Alexandre de Gusmão for a total of US$1.615 billion. The project financing is provided by a consortium of 12 international banks with insurance cover from 3 international Export Credit Agencies. It will have a processing capacity of 180,000 barrels of oil and 12 million m3 of gas per day. The FPSO construction is progressing as per plan with the expected first oil in the second half of 2024. FPSO Alexandre de Gusmão is owned and operated by special purpose companies owned by affiliated companies of SBM Offshore (55%) and its partners (45%). The FPSO will be deployed at the Mero unitized field located in the Santos Basin approximately 160 kilometers offshore Rio de Janeiro in Brazil, under a 22.5-year lease and operating contract with Petróleo Brasileiro S.A. The Mero unitized field is operated by Petrobras (38.6%), in partnership with Shell Brasil (19.3%), TotalEnergies (19.3%), CNPC (9.65%), CNOOC (9.65%) and Pré-sal Petróleo S.A. – PPSA (3.5%), representing the Government in the non-contracted area. [Despite very extensive press coverage of the project, not one article mentions which 3 ECAs are providing insurance coverage.]
Embraer closes US$ 200 million EXIM credit facility with Citibank
(ARGS, London, 9 March 2023) Embraer has closed a US$ 200 million credit facility to finance purchases from direct suppliers in the United States. This financing is being provided by Citibank and guaranteed by the Export-Import Bank of the United States (EXIM), the country’s official export credit agency. This credit facility with EXIM and Citibank will support Embraer’s efforts to diversify its credit operations in the aviation market worldwide, providing the company with additional financing options and improving its loan profile.
Netherlands contradicts COP26 promise, moves ahead to support 30 year oil and gas production project in Brazil
(Price of Oil, Washington, 23 March 2023) The Netherlands just contradicted its COP26 pledge to end public finance for fossil fuels by the end of 2022 and shift this money to clean energy by issuing a commitment to insure the Brazil Santos Basin Pre-Salt Pole oil and gas production project for around USD 321 million. The Netherlands published a policy implementing the commitment in November 2022, but it has major loopholes that allow continued fossil support by the Dutch Export Credit Agency (ECA) Atradius DSB. This includes a “transition period” in breach of the agreed end of 2022 deadline, allowing projects that have requested financial support in 2022 to still be approved in 2023.
