Beijing is considering increasing imports for fear of Trump's influence on Arab producers; Brazil is also seeking reciprocal investments in shipyards.
The increasing trade tensions between China and the United States are opening up new opportunities for Brazil to expand its oil exports to the Chinese market. In recent weeks, the Brazilian government has received requests from Beijing to strengthen its role as a supplier of crude oil to China. The reason for this interest is the growing unrest over the veiled threats between Washington and Beijing.
On the Brazilian side, there is even hope that a memorandum of understanding could be signed during President Luiz Inácio Lula da Silva's visit to Beijing this week. It is expected that the presence of Mining and Energy Minister Alexandre Silveira in the presidential delegation will add weight to the Brazilian strategy of pushing for an agreement or at least a framework between the two countries.
The issue was already raised during a recent visit by Brazilian officials to China to lay the groundwork for President Lula's trip. The CEO of Petrobras, Magda Chambriard, and the President of Transpetro, Sergio Bacci, took part in these talks in Beijing. Ms. Chambriard took the opportunity to encourage Chinese officials to visit Brazilian shipyards.
"We are here to propose the expansion of the Brazil-China partnership in oil and gas investment. We see opportunities for Chinese companies to work with Brazilian shipyards and we believe that closer cooperation will bring benefits to both sides," Ms. Chambriard said at the opening of the meeting.
While Petrobras $PETR3 (-1,14 %)
$PETR4 (+0,48 %) has publicly announced Ms. Chambriard's activities in Beijing, overall efforts to engage with China on energy issues have been handled discreetly by the presidential palace. On April 30, Lula met with Chinese Foreign Minister Wang Yi in Brasília, but this meeting was not on his official agenda.
Instead, the presidential press office (Secom) only named Ambassador Celso Amorim as the person who met with Lula that day. According to government sources, the omission was made at the request of Chinese officials, who did not want to provoke any retaliatory measures from Washington in view of the closer relations between Beijing and Brazil.
China has emerged as a global powerhouse in shipbuilding, in stark contrast to Brazil's flagging industry, which has struggled since the Car Wash corruption investigation. Critics have also pointed to local content requirements as an obstacle to competitiveness. However, the Lula government is attempting to revive investment in the sector by restructuring the Merchant Marine Fund (FMM). Transpetro alone has announced plans to acquire 25 new ships.
The Brazilian plan to revitalize shipping also includes the construction of floating production, storage and offloading (FPSO) units. If the plans are confirmed, the visits by Chinese investors would probably take place in the days leading up to the BRICS summit in early July.
It is expected that the owners of large Chinese shipyards will assess the condition of the existing shipyard infrastructure in Brazil.
To sweeten the deal, the Brazilian Development Bank (BNDES) is offering special credit lines to facilitate access to the fund for Chinese companies. Officials argue that these financing terms could be as attractive as those offered by Chinese lenders by meeting the requirements for local content in the construction of ships.
Beijing's strategic interest in Brazilian oil is not new. Chinese companies have participated in pre-salt auctions before, bidding on oil volumes managed by the state-owned PPSA. Today, oil is one of Brazil's three most important exports to China alongside soybeans and iron ore.
Petrobras, Transpetro and the Chinese embassy did not immediately comment.