Brazil, Japan sign agreements on soy, oil and gas

Japanese banks are to lend $500M to Petrobras to build oil platforms.

Brazil, Japan sign agreements on soy, oil and gas

World Bulletin / News Desk

Brazil’s President Dilma Rousseff and Japanese President Shinzo Abe signed a raft of bilateral agreements Friday including a $500 million line of credit for Brazilian oil giant Petrobras to help it build new offshore oil platforms.

Japanese bank Mizuho is to lend heavily indebted Petrobras the cash to help it ramp up exploration and production in its vast pre-salt oil fields.

These reserves, discovered in 2007, are thought to hold as much as 60 billion barrels of crude, but tapping the reservoirs is extremely difficult and costly, as they lie in ultra-deep water beneath a layer of salt some two kilometers thick.

Abe’s visit to Brazil wraps up a Latin American and Caribbean tour which also saw him sign oil and gas deals in Mexico.

Access to oil and gas, in particular, have become much more important to Japan since nuclear power was shut down in the country following the 2011 Fukushima power plant disaster.

Abe’s visit comes on the heels of a nine-day Latin American trip by Chinese President Xi Jinping, as Asian leaders jostle for access and influence over the region’s key commodities.

"It’s not a geopolitical dispute, but there is geoeconomic competition," Marcos Troyjo, co-director of the BRICLab at Colombia University, told the Anadolu Agency. "[Japan] wants to make inroads into Latin America to guarantee access to its mineral and agricultural commodities, and one way of doing this is by strengthening the infrastructure of Latin American countries."

Japan is Brazil's sixth largest trading partner, with trade between the two countries exceeding $15 billion in 2013.

Also signed Friday was a deal which will see Japanese bank Sumitomo Mitsui Banking Corp lend $200 million to soy grower Amaggi.

As Brazil’s economy has grown, its production of commodities has soared, outpacing investment in infrastructure and road and port capacity. The inadequacy of Brazil’s infrastructure made headlines last year when record soy and corn harvests piled up at ports, unable to be loaded onto boats.

Jinping’s visit to Brazil last month saw China agree to help finance a railway that will run from Brazil’s Atlantic coast across the country to Pacific ports. This will allow China faster and easier access to the vast quantities of commodities -- particularly soy and iron ore -- it buys from Brazil.

Güncelleme Tarihi: 02 Ağustos 2014, 10:11