Global Interdependence, Energy Security and Domestic Industrial Development: Japan Foreign Oil Relations with Brazil

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Abstract

From the around 2013, following long bilateral government and corporate discussions, all major Japanese trading companies, industrial and engineering groups and shipbuilders and energy related companies entered the Brazilian oil and gas upstream offshore market in partnership with Brazilian firms. The partnerships followed long, high level bilateral discussions and were supported by Japanese government agencies’ finance and technical assistance and received preferential loans from Brazil’s development bank BNDES. However, within a few short years, in the wake of the Car Wash corruption scandals that hit almost all their local partners, nearly all Japanese companies abandoned their new businesses in Brazil resulting in huge losses. Over the course of the last decade and into the current one, Brazil’s national oil company Petrobrás awarded multiple contracts to a pool of Japanese companies led by MODEC, a subsidiary of Mitsui & Co., and to Mitsubishi Corporation in partnership with the Dutch company SBM Offshore to build and operate twenty FPSOs. Over this period, Japanese government agencies extended project finances and credit lines upwards to US $ 10 billion. This paper analyzes these dual contrasting trajectories of Japanese oil relations with Brazil to explore the crossed effects of the countries’ global interdependence on the respective domestic policies and institutions and discusses the impacts in shaping future development orientations and state policies in both countries. It argues that Japan’s foreign oil relations with Brazil are driven, first, by the continued need to meet an independent development ratio of 40% in 2030, from 26.6% in 2017. Second, by the goals established by its Third Plan on Ocean Policy, the promotion of marine industries and strengthening of their international competitiveness. Finally, it provides a boost to stave off the long decline of its ailing shipbuilding and shipping industries, whose survival is a pre-condition to the previous goal.

Journal

  • Latin America Ronshu

    Latin America Ronshu 53 (0), 1-28, 2019

    Japan Society of Social Science on Latin America

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