Vitter Questions Export-Import Bank’s $2 Billion Loan For Offshore Drilling In Brazil

(Washington, DC) – U.S. Sen. David Vitter today sent a letter to the President of the Export-Import Bank of the United States, Fred Hochberg, seeking answers to the $2 billion the bank loaned a Brazilian state-owned oil company, Petrobras, to produce energy

off the coast of Brazil. Hochberg will be traveling to Brazil with President Obama at the end of the week.

“Louisianians are frustrated with the ongoing de facto moratorium, and 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 said. “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.”

Below is a copy of Vitter’s letter.

March 17, 2011

Fred Hochberg

President

Export-Import Bank of the United States

811 Vermont Avenue, N.W.

Washington, DC 20571

Dear Mr. Hochberg:

I write in light of your trip to Brazil at the end of the week, on which you will be traveling with President Obama.

In August of 2009 you received a copy of the letter I sent to the President regarding the Export-Import Bank’s (ExIm’s) decision to move forward with extending a $2 billion loan to Petrobras, Brazil’s state-owned oil company. Despite the fact that the letter was addressed to the President, my staff received a response via telephone from ExIm noting the multi-billion dollar loan. It was made clear during that phone conversation that the loan would do more than simply help Brazil expand its domestic offshore exploration and production capabilities.

ExIm pointed out to my staff that the purpose of the bank was to provide loans that would enhance exports to foreign countries with the ultimate benefit going to U.S. businesses. In other words, there would be significant return on this investment in the form of interest on the loan as well as an increase in the growth of U.S. manufactured products to be used in Brazil’s offshore exploration industry.

In April 2010, the Gulf of Mexico experienced the tragic blowout of the Macondo well, and the resulting loss of 11 lives and severe environmental damage. This tragedy and the resulting impacts have hurt the state of Louisiana and the country as a whole. However, rather than learn from this tragedy, the Interior Department has used it as an ongoing tool and excuse to cripple domestic energy production in federal waters. To date, only two permits to drill have been issued for the deepwater Gulf of Mexico.

Two permits for an industry the President claims to support is a far cry from the “support” of $2 billion ExIm loaned to Petrobras-Brazil. Accordingly, 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 Petrobras.

Specifically, could you please provide the following information:

1.The name of all U.S. companies that have increased exports based on this loan.

2.The specific product exports that have increased based on this loan.

3.The return on investment for this loan during the next 5 and 10-year windows.

4.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.

I am sure you can understand the frustration Louisianians have with a $2 billion loan to produce energy offshore Brazil. 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.

Sincerely,

David Vitter

U.S. Senate

Cc: President Barack Obama

Secretary Ken Salazar

U.S. Trade Representative Kirk

Gulf of Mexico Delegation