Senator Questions $2-Billion Loan to Brazil for Offshore Drilling as Domestic Production Languishes

March 21, 2011 - 10:17 AM

Sen. David Vitter

Sen. David Vitter (R-La.) (AP Photo)

(CNSNews.com) – Sen. David Vitter (R-La.) is questioning how the United States has benefited from a $2-billion loan the Export Import Bank of the United States made to a Brazilian oil company for its offshore drilling operations.

How has that loan, made several years ago, helped U.S. companies, the senator asked in a March 17, 2011 letter to Fred Hochberg, president of the Export-Import Bank.

“I am sure you can understand the frustration Louisianans have with a $2 billion loan to produce energy offshore Brazil,” Vitter wrote to Hochberg – especially given the “ongoing de facto moratorium” on deepwater drilling in the Gulf of Mexico.

The Obama administration has approved only three permits for drilling new deepwater wells in the Gulf of Mexico since it lifted its moratorium on issuing permits last October– seven months after the BP rig explosion and oil spill.

“I would appreciate a full accounting for the return on investment the American taxpayer has received, and is anticipated to receive, on the $2 billion loan to this Brazilian petroleum company,” Vitter wrote to Hochberg. “I want to understand why permitting domestically is nearly stalled, and if there is at least a return on this investment over the last year and a half for supporting production offshore Brazil.”

When Vitter first inquired about the loan to Brazil’s Petrobras two years ago, the Export-Import Bank responded to Vitter’s staff by telephone, explaining that the U.S. would benefit from the loan through the increased export of U.S. drilling products and services.

The Export-Import Bank of the United States, the official export credit agency of the United States, helps finance the export of U.S. goods and services to international markets.

Specifically, Vitter now wants to know:

-- The name of all U.S. companies that have increased exports based on this loan.
-- The specific product exports that have increased based on this loan.
-- The return on investment for this loan during the next 5 and 10-year windows.
-- The name of all U.S. and foreign investors, including institutional investors, that increased their shareholdings in Petrobras in excess of $50 million within a 6 month period before and after the ExIm loan.

“Given that U.S. offshore oil and gas reserves are estimated at nearly triple the 40 billion barrels estimated offshore Brazil, a thorough response from you would be helpful in understanding why permitting domestically is nearly stalled, and if there is at least a return on investment for supporting production offshore Brazil,” Vitter wrote.

President Obama was in Brazil over the weekend. On Monday, he arrived in Chile, and from there he’ll stop in El Salvador. The White House says the South American trip is intended to seek out “job creating opportunities.”

Export-Import Bank President Hochberg is among the delegation accompanying the president to Brazil, Chile and El Salvador.