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Warren Fiske
By Warren Fiske December 12, 2011

George Allen says U.S. lent $2 billion to Brazil for oil and gas exploration

U.S. Senate candidate George Allen wants to drill here and now.

The Republican has repeatedly reminded voters that the U.S. has the largest fossil fuel reserves in the world and faulted President Barack Obama for not aggressively developing them.

Allen brought up the issue again in a Dec. 7 debate against Democrat Tim Kaine, who is also pursuing the U.S. Senate seat in 2012 that will be vacated by Jim Webb, D-Va. Allen voiced frustration with the Obama administration’s refusal to allow oil and natural gas leases off Virginia’s coast.

"Our federal government has lent $2 billion to the state-owned oil company of Brazil to allow them to explore for oil and gas, and that shows how contradictory our energy policies are," Allen said.

Is the U.S. really financing $2 billion worth of off-shore energy production in Brazil?

To back the claim, the Allen campaign emailed postings from several websites, including Forbes Magazine. Our research, however, shows that some of the information in the articles was loosely interpreted by Allen, and some of the information was inaccurate.

All of the articles center on a tentative offer by the Export-Import Bank of the United States in April 2009 to provide up to $2 billion in financing to Petrobras, Brazil’s national oil company.

The Export-Import Bank is an independent federal agency that provides financing options -- including direct loans, guarantees of loans and  export-credit insurance -- to foreign buyers to help them purchase U.S. goods and services.  

The bank, as noted in a September story by PolitiFact’s national staff, receives its spending authority from Congress but gets no appropriated funds. It operates using revenues from the fees and interest that it charges lenders and borrowers, although its transactions are ultimately backed by the U.S. government’s faith and credit. The bank is allowed to have up to $100 billion in outstanding loans.

We called Ex-Im Bank’s spokesman, Phil Cogan, and asked him to assess Allen’s statement.

"It is not correct," he said.

Ex-Im’s tentative agreement was an "expression of the bank’s willingness" to consider up to $2 billion in loan applications from Petrobras to finance its purchase of U.S. goods and supplies. All five of the bank’s board of directors who approved the decision were appointed by former President George W. Bush, a Republican.

On Feb. 4, 2010, the Ex-Im Bank agreed to guarantee a $308 million private loan to Petrobras made by JPMorgan Chase. The loan guarantee is helping Petrobras purchase goods and services from about 150 U.S. companies, according to Cogan.

There were no other financial transactions between Ex-Im and Petrobras before their preliminary loan agreement expired in April 2011. Cogan said it has not been renewed.

So Ex-Im did not directly lend any money to Petrobras, let alone the $2 billion Allen claimed. All it did was back a $308 million loan that a private bank made to the Brazilian oil company.

Dan Allen, a senior adviser to the Allen campaign, told us George Allen should not be faulted for making a mistake about Ex-Im and Petrobras. He said George Allen based his statement on information published by credible news sources.

"We just didn’t come up with the stuff and throw it against the wall," Dan Allen said. "We relied on something published on Forbes magazine’s website."

He referred us to a May 2011 posting headlined "Petrobras to Tap Ex-Im Loan `Soon.’" The Forbes article, however, appears to be referring to the closing of JPMorgan Chase’s loan to Petrobras that Ex-Im guaranteed.

Dan Allen also sent us an article that ran this August in The Hill, a publication that covers Congress. That story, however, never said a $2 billion loan had been made. It merely noted that "Republicans railed against a 2009 proposed $2 billion commitment from the U.S. Import-Export Bank to the Brazilian oil company Petrobras."

Different claims about about the loan have been circulated over the last two years by conservative voices such as The Wall Street Journal editorial page, Fox News and Gov. Rick Perry, R-Texas.

Seeking to counter misinformation, Ex-Im has posted a website fact sheet about its relationship with Petrobras. The bank takes exception to statements by Allen and others that the dealings reflect inconsistent federal policies on off-shore drilling.

"There is no connection between the federal policies on offshore drilling in U.S. waters and financing U.S. export sales by other countries," the fact sheet says. "In fact, should Ex-Im Bank refuse to finance sales by U.S. companies it is likely that the sales will go instead to their foreign competitors."

Our conclusion:

Allen says the U.S. government lent $2 billion to Petrobras, the state-owned oil company of Brazil.

He is referring to a preliminary agreement by the U.S. Export-Import Bank, an independent federal agency, to consider offering up to $2 billion in financing to help Petrobras buy American goods and services.

In 2010, Ex-Im agreed to guarantee a $308 million private loan made to Petrobras by JPMorgan Chase. There were no other transactions, and Ex-Im’s agreement with Petrobras expired this April.

The bottom line is that that Ex-Im did not directly lend any money to Petrobras. We rate Allen’s statement False.

Featured Fact-check

Our Sources

George Allen, U.S. Senate debate, Dec. 7, 2011.

Interviews with Dan Allen, adviser to George Allen, Dec. 9-11, 2011.

Interviews with Phil Cogan, vice president/press secretary for the Export-Import Bank of the United States, Dec. 8-11, 2011.

Export-Import Bank of the United States, Fact sheet on Ex-Im’s dealings with Petrobras, accessed Dec. 8.

InvestinBrazil, U.S Export-Import Bank extends $3 billion credit to Brazil, March 22, 2011.

Forbes, Petrobras to tap Ex-Im loan "soon," May 20, 20.

The Hill, Obama administration to launch Brazil energy partnership next week, Aug. 12, 2011.

The Wall Street Journal, Obama underwrites offshore drilling, Aug. 18, 2009.

PolitiFact, Rick Perry Says Obama delivered $2 billion to Brazil to help offshore drilling, Sept. 1, 2011.

Fox News, Left strangely silent on Petrobras, May 1, 2011.

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