ICBC Leasing signs $2 billion sale and leaseback agreement with Petrobras

On October 13, 2015, Petróleo Brasileiro S.A. (Petrobras) announced the conclusion of successful negotiations on a $2 billion financing agreement with ICBC Financial Leasing Co., Ltd. (ICBCFL; ICBC Leasing). The sale and leaseback agreement spans 10 years and provides a financial lease for two of Petrobras' existing deep-water oil platforms (P-52 and P-57) from its wholly-owned subsidiary Petrobras Netherlands B.V. (PNBV). The funds were to be made available to Petrobras once both parties fulfilled the precedent conditions of the agreement. Then, on March 8, 2016, Petrobras received $1 billion from ICBC Leasing in exchange for the P-52 offshore oil platform, per the October 2015 agreement. The P-52 offshore oil platform was sold to the bank (ICBC Leasing) and the debt was to be settled by lease payments. The transaction had a 10 year maturity. Full ownership of the oil platform was to be transferred back to Petrobras by the end of the lease term in March 2026. Then, on September 10, 2018, Petrobras prepaid $750 million for financial leasing on P-52 despite the original maturity of March 2026. The P-52 oil platform is located in Roncador oil field in Brazil’s Campos Basin. The P-57 oil platform is located in Jubarte oil field.

Additional details

1. This project represents one part of a larger cooperation agreement signed by Chinese Premier Li Keqiang during his visit to Brazil in May 2015 to facilitate cooperation between Petrobras and ICBC. 2. Sale and leaseback (or sale-leaseback) agreements are generally considered to be off-balance-sheet hybrid debt products.

Number of official sources

6

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9