Drill Baby Drill

As reported by The Wall Street Journal, President Obama is going to lend billions of dollars to Brazil's state-owned oil company, Petrobras, to finance exploration of the huge offshore discovery in Brazil's Tupi oil field in the Santos Basin near Rio de Janeiro.

Yes, you read correctly. The U.S. Export-Import Bank tells The Wall Street Journal it has issued a "preliminary commitment" letter to Petrobras in the amount of $2 billion and has discussed with Brazil the possibility of increasing that amount.

The Export-Import Bank does not receive appropriations from Congress, and therefore does not rely on taxpayer dollars. The bank will not be sending money directly to Petrobras; instead it will be extending lines of credit to U.S. firms so they can compete to land contracts as part of Petrobras' drilling operations.

So it would appear at first glance that while the environmentally-friendly Obama administration is not willing to allow off-shore drilling along U.S. coastal regions, it is more than happy to facilitate such actions abroad.

When questioned Thursday, White House Press Secretary Robert Gibbs was not prepared to comment.

One further and very important note: As reported by Bloomberg.com, Billionaire investor George Soros cut his stake in his biggest holding, Petroleo Brasileiro SA, in the second quarter while buying more shares of other energy producers.

His New York-based hedge-fund firm, Soros Fund Management LLC, sold 22 million U.S.-listed common shares of Petrobras, as the Brazilian oil company is known, according to a filing today with the U.S. Securities and Exchange Commission. Soros bought 5.8 million of the company’s U.S.-traded preferred shares.

Soros is taking advantage of the spread between the two types of U.S.-listed Petrobras shares, said Luis Maizel, president of LM Capital Group LLC, which manages about $4 billion. The common shares were 21 percent more expensive than preferred today, according to data compiled by Bloomberg.

“He knows he held a voting right in the common shares that would never translate to actual power,” Maizel said in an interview from San Francisco. “He’s just playing the spread.”