The UK government will provide hundreds of millions of pounds worth of financial support to Brazil’s national oil company despite it facing corruption investigations in multiple countries.
Whitehall is finalising a $500m (£330m) credit for oil giant Petrobras, a generous export finance deal designed to support the development of deepwater oil and gas projects offshore Brazil.
The decision comes as Petrobras remains mired in a multibillion-dollar bribery and money-laundering scandal that has ensnared the company, its contractors and senior Brazilian politicians.
In recent months, investigations into the Petrobras scandal have intensified and spread beyond Brazil to Switzerland and the US.
Investigators at the US Department of Justice (DoJ) are understood to have opened a criminal investigation into whether Petrobras employees, contractors or middlemen were involved in the sprawling bribery scheme.
The UK’s export finance agency, UKEF, said it will extend the line of credit to Petrobras for it to purchase goods and services from UK exporters. UKEF routinely helps finance major oil and gas projects around the world despite government pledges to withdraw this kind of assistance.
In Brazil, the UK’s support will help Petrobras and other multinational oil companies exploit colossal, untapped reserves of oil and gas in Brazil’s deepwater basins. The decision comes just days before UK ministers head to Paris to participate in international climate change negotiations at the COP21 summit.
A spokesman for UKEF defended the decision to support Petrobras. He said the agency carries out full anti-bribery due diligence checks before supporting such projects, and in this case, found the company had taken “significant steps to reform its senior managerial and compliance structures”.
He told the Guardian that UKEF conducted “full environmental impact assessments” in relation to the line of credit for Petrobras and the project was benchmarked against international standards.
However, environmental and anti-corruption campaigners have attacked the latest package of support for Petrobras.
Dr Doug Parr, chief scientist at Greenpeace UK said: “The government say they’ve run out of money for clean energy at home, yet they’re bankrolling a half-a-billion-dollar deal with a fossil fuel giant embroiled in a massive corruption scandal thousands of miles away.
“David Cameron has just put his name to a G20 pledge to phase out fossil fuel subsidies and support clean energy, but back home his government is doing the exact opposite.”
A spokeswoman for Corruption Watch, a London-based NGO, said UKEF’s decision to extend a line of credit to Petrobas is “deeply troubling” given the ongoing investigations into Petrobras and its contractors.
“This business-as-usual approach sends entirely the wrong message as to how serious UKEF is about corruption.”
She said Corruption Watch believes the agency “needs to explain publicly what steps it has taken to ascertain whether corruption was involved in Petrobas contracts it has underwritten previously.”
Earlier this year, the Guardian reported UKEF had provided major financial support to the construction of a large oil platform in Brazil, which has since been identified as one of the main projects implicated in the corruption scandal.
Alongside Petrobras, Shell is a highly active player in Brazil’s coveted deepwater oil fields. Following its takeover of BG Group this year, the Anglo-Dutch oil giant will join Petrobras as a joint-venture partner in numerous offshore oil projects.
This latest round of support forms part of a $1.84bn finance deal being offered by export finance agencies in Austria, Italy and Japan. Over the next year, Petrobras – which has had its credit rating downgraded to junk status – will nominate specific export contracts for financing under the line of credit.
The UKEF spokesman said the deal is in line with the agency’s credit risk policies. He added: “UKEF’s role is to support UK exporters, particularly where the private market is unable to do so in whole or in part, and the oil and gas sector is a major employer in the UK.”
