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$2 Billion U.S. Taxpayer Money For 8th Largest Company Off Shore Drilling To Benefit China and George Soros

June 16, 2010
The U.S. Export-Import Bank tells us it has issued a “preliminary commitment” letter to Petrobras in the amount of $2 billion and has discussed with Brazil the possibility of increasing that amount. Ex-Im Bank says it has not decided whether the money will come in the form of a direct loan or loan guarantees. Either way, this corporate foreign aid may strike some readers as odd, given that the U.S. Treasury seems desperate for cash and Petrobras is one of the largest corporations in the Americas.

But look on the bright side. If President Obama has embraced offshore drilling in Brazil, why not in the old U.S.A.? The land of the sorta free and the home of the heavily indebted has enormous offshore oil deposits, and last year ahead of the November elections, with gasoline at $4 a gallon, Congress let a ban on offshore drilling expire.

The Bush Administration’s five-year plan (2007-2012) to open the outer continental shelf to oil exploration included new lease sales in the Gulf of Mexico. But in 2007 environmentalists went to court to block drilling in Alaska and in April a federal court ruled in their favor. In May, Interior Secretary Ken Salazar said his department was unsure whether that ruling applied only to Alaska or all offshore drilling. So it asked an appeals court for clarification. Late last month the court said the earlier decision applied only to Alaska, opening the way for the sale of leases in the Gulf. Mr. Salazar now says the sales will go forward on August 19.

This is progress, however slow. But it still doesn’t allow the U.S. to explore in Alaska or along the East and West Coasts, which could be our equivalent of the Tupi oil fields, which are set to make Brazil a leading oil exporter.

Americans are right to wonder why Mr. Obama is underwriting in Brazil what he won’t allow at home.

Here’s one reason why Obama is underwriting off shore drilling in Brazil – his major political contribuor makes a lot of money off the deal and off of American Taxpayers.   I wonder if George Soros contributed $2 billion to Obama’s campaign, because he’s getting that much and more in pay to play politics payback.

Soros Hedge Fund Bought Petrobras Stake Worth $811 Million

 

Aug. 15 (Bloomberg) — Billionaire investor George Soros bought an $811 million stake in Petroleo Brasileiro SA in the second quarter, making the Brazilian state-controlled oil company his investment fund’s largest holding.

As of June 30, the stake in Petrobras, as the Rio de Janeiro-based oil producer is known, made up 22 percent of the $3.68 billion of stocks and American depositary receipts held by Soros Fund Management LLC, according to a filing with the U.S. Securities and Exchange Commission. Petrobras has since slumped 28 percent.

Soros has increased his mining and commodities holdings, a move that accelerated in the first quarter with purchases of such companies as Cia. Vale do Rio Doce, the world’s largest iron-ore producer, and Talisman Energy Inc., a Canadian oil and gas company. In November, Petrobras announced the discovery of Tupi, a field with as much as 8 billion barrels of reserves, making it the largest find in the Americas since 1976.

“Petrobras has something that other oil companies don’t have: oil — lots of it and they’re going to find more,” said Ricardo Kobayashi, equity fund manager with UBS Pactual SA in Rio de Janeiro, which manages about $5 billion of stocks, including shares in Petrobras. “If you can buy now and hang on, if you have the staying power, it’s great.”

Tupi is part of a new deepwater offshore region known as the pre-salt that may contain as much as 50 billion barrels, according to Peter Wells, oil analyst with the U.K.’s Neftex Petroleum Consultants Ltd.

Share Slump

The drop in Petrobras’ U.S.-traded common shares since June 30 would have reduced the value of Soros’s disclosed stake by $235 million.

Soros Fund Management didn’t report holding any Petrobras shares at the end of the first quarter. It did disclose much smaller stakes in the Brazilian oil company during 2007, including 150,000 depositary shares, with a market value of about $17.3 million, at Dec. 31. The hedge fund company also had calls on another 35,000 shares at Dec. 31.

Petrobras shares traded at an average closing price of $64.83 each during the second quarter, when Soros bought the stake. The shares today dropped 91 centavos, or 1.8 percent, to $50.68 in New York, valuing Petrobras at $204.8 billion, the world’s 11th-biggest company by market capitalization.

Michael Vachon, a Soros spokesman, didn’t immediately return a telephone call seeking comment.

To contact the reporters on this story: Jeb Blount in Rio de Janeiro at jblount@bloomberg.net; Miles Weiss in Washington at mweiss@bloomberg.net.

Obama Underwrites With U.S. Taxpayer Dollars Offshore Drilling to Benefit China and George Soros

From the Wall Street Journal

You read that headline correctly. Unfortunately, the Obama Administration is financing oil exploration off Brazil.

The U.S. is going to lend billions of dollars to Brazil’s state-owned oil company, Petrobras, to finance exploration of the huge offshore discovery in Brazil’s Tupi oil field in the Santos Basin near Rio de Janeiro. Brazil’s planning minister confirmed that White House National Security Adviser James Jones met this month with Brazilian officials to talk about the loan.

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