Interview: Petrobras CEO José Sergio Gabrielli

American fears of China's growing global influence sharpened this spring as Beijing set its sights on the Americas. Leaders of China and Brazil began speaking openly about the possible end of the dollar's reign as the global reserve currency. China surpassed the United States as Brazil's leading trade partner, and Brazil's energy giant, Petrobras, took a $10 billion loan from the China Development Bank designed to finance oil deals without using the dollar. Petrobras president and CEO José Sergio Gabrielli de Azevedo flew to Beijing with Brazilian President Luiz Inácio Lula da Silva to finalize the deal. He spoke with NEWSWEEK's Manuela Zoninsein about the budding relationship with China. Excerpts:

How has the financial crisis strengthened the Brazil-China relationship, and has it done so to the detriment of Brazil-U.S. ties?
The global economic crisis caused the debt markets to become more selective, restricting access to credit and to sources of funding, particularly in the U.S., where the subprime crisis surfaced. Meanwhile, China became a major financial center, interested in funding projects in several countries around the world.

China and Brazil are competitors in some areas.
On one hand, Brazil can help supply China's energy needs. On the other, China can be a great funder for Brazilian projects and a good and service provider for the energy-productive chain in Brazil. It's a very good deal: China needs oil and has money; we need money and have oil. It's a win-win type of deal.

Where can the two giants work together?
In the development of technologies. In Brazil, we have advanced technological segments, such as the aviation industry. We have made great developments in the biofuels area, in addition to the progress we have made at Petrobras with our expertise in developing deepwater exploration technologies.

China and Brazil are discussing how to use their own currencies in future trade deals. What does this mean for the dollar's hegemony in Latin America?
Petrobras negotiates using U.S. dollars as reference. But I believe it could be positive for Brazil and for China to use their national currencies in the purchase and sale operations. It could increase the trade flow between the two countries.

Ten years from now, what will people remember that today's crisis changed in international politics and trade patterns?
The global GDP growth pace will depend more on developing countries than it did in the past, and this will be reflected in the financial architecture. The relative importance of the G20 compared to the G8 will grow.

Can you explain the terms of the Sinopec deal? Petrobras supplies 150,000 barrels of oil a day for the first year, rising to 200,000 barrels a day for nine more years, for which it gets a $10 billion loan?
The exports agreement with Sinopec and the funding provided by the China Development Bank are two different agreements. The loan taken out from the CDB will be paid in cash, not oil. Exports to Sinopec are a guarantee for the loan, but they will be negotiated in commercial terms for each delivery. The agreement does not provide for a mandatory sale volume, nor does it set prices.

Where will oil prices stabilize?
Our projects are sustainable based on an oil price ranging from $37 to $45 per barrel. The international oil price is not necessarily relevant for trade and future investment decisions since there are great fluctuations in the price of the barrel. But I see an increase in the oil price.

The Brazilian government owns 40 percent of the stock and 58 percent of the voting shares of Petrobras. Did Brasília push this deal?
This fundraising opportunity resulted from cooperation between our countries. As the company's majority stakeholder, the Brazilian government acts as a great driver for Petrobras's trade relations with companies from other countries.