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Email: Obama Finances Offshore Oil Drilling in Brazil

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Forwarded email claims President Obama signed an executive order lending $2 billion of taxpayer money to a Brazilian oil company for offshore drilling to produce oil for China.

Description: Email rumor
Circulating since: Aug. 2009
Status: Mostly false

Email text contributed by Keith H., Sep. 8, 2009:

This is a perfect example why I refrain from watching the news on ABC, NBC, CBS, CNN or NSNBC. Today (20 August 2009) on a segment of the "Glen Beck Show" on FCN (Fox Cable News) was the following:

"Today even though President Obama is against off shore drilling for oil for this country. He signed an executive order to loan 2 Billion of our taxpayers dollars to a Brazilian Oil Exploration Company (which is the 8th largest company in the entire world) to drill for oil off the coast of Brazil. The oil that comes from this operation is for the sole purpose and use of China and not the USA. The Chinese government is under contract to purchase all the oil that this oil field will produce, which is hundreds of millions of barrels of oil". We have absolutely no gain from this transaction whatsoever.

Wait it gets more interesting. Guess who is the largest individual stockholder of this Brazilian Oil Company and who would benefit most from this? It is American Billionaire, George Soros, Liberal businessman who is a radical left wing supporter, finances MoveOn.org as well as other liberal programs and was President Obama's largest and most generous supporter during his campaign. If you are able to connect the dots and follow the money, you are probably as upset as I am. Not a word of this transaction was on any of the other news networks.

Analysis: Unfounded rumors. President Obama signed no such executive order.

In April 2009, the U.S. Export-Import Bank, whose stated mission is "to assist in financing the export of U.S. goods and services to international markets," approved a preliminary commitment to lend at least $2 billion to Petrobras, Brazil's national oil company, to fund the purchase of equipment and services from American companies. The commitment was approved by the Export-Import Bank's bipartisan Board of Directors before any Obama appointees joined the agency.

As the Export-Import Bank is self-sustaining, no taxpayer moneys are involved.

While it's true that Petrobras has committed to supplying China with up to 200,000 barrels of oil a day for the next 10 years (thanks to a $10 billion loan from that country's Development Bank), it's not true that all of the oil produced under the U.S. agreement is earmarked for China.

Billionaire George Soros' hedge fund, Soros Fund Management LLC, owns millions of shares in Petrobras, though according to Bloomberg.com he cut his stake considerably during the second quarter of 2009. Soros was a major supporter of Obama's presidential bid and contributed to his 2008 campaign.

As to the claim that the U.S. has "absolutely no gain from this transaction whatsoever," Export-Import Bank Chairman Fred P. Hochberg begs to differ, stating that Bank's mandate is to "help create and sustain U.S. jobs by financing U.S. exports. Our offer to provide financing to Brazil's state-owned oil company Petrobras does exactly that."

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Sources and further reading:

Petrobras May Borrow $5 Billion from U.S. Ex-Im Bank
Bloomberg, 30 July 2009

Facts About the Proposed Ex-Im Bank Loans for Petrobras' Brazilian Offshore Oil Exploration and Development
Export-Import Bank press release, 20 August 2009

China, Brazil Sign Oil Deal
Voice of America, 20 May 2009

President Obama Underwrites Offshore Drilling in Brazil
Wall Street Journal (op-ed), 18 August 2009

Brazil Loan Helps U.S. Manufacturers
Wall Street Journal (Letter to the Editor), 21 August 2009

George Soros Cut Petrobras Stake in Second Quarter
Bloomberg, 14 August 2009

Last updated 02/12/10

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