Petrobras in $1 Billion Project Financing of Brazilian Offshore Oil Platform and Pipelines
March 30, 2005
Cleary Gottlieb represented Petróleo Brasileiro S.A. - Petrobras in arranging for the construction, financing and operation of an offshore crude oil platform and pipelines in the deepwater oil fields of Brazil. The $1 billion arrangement was signed and funded after two years of negotiations.
The underwater pipelines will connect the platform to six separate blocks in the Campos Basin, the most significant offshore oil and gas fields in Brazil. When operational at the end of 2006, the system is expected to deliver up to 630,000 barrels a day of crude oil onto shuttle carriers that will in turn ship the crude oil to onshore refineries in Brazil.
The project involved three tranches of financing, provided by a number of Japanese commercial banks, as well as multilateral and export credit agencies and trading houses. Japan Bank for International Cooperation, the Japanese development bank, provided a senior loan facility of approximately $500 million. Mizuho Corporate Bank arranged the commercial facility of approximately $350 million with a syndicate of 12 commercial banks, insured by Nippon Export and Investment Insurance. Finally, Mitsubishi Corporation and Marubeni Corporation provided the remainder of the financing in their role as equity investors and subordinated lenders.
This is the latest Campos Basin structured project financing by Petrobras using a modified rental structure in which equity investors create a special purpose vehicle to incur financing debt to purchase the equipment and services. The special purpose vehicle then rents the equipment to Petrobras and uses the rental payments to repay the financing. This structure, which has been used frequently by Petrobras in the Campos Basin with much success, has promoted significant Japanese investment in Brazil.