PETROBRAS CANCELS OIL PURCHASE FROM SAUDI ARABIA

  Brazil's state oil company
  Petrobras has cancelled a 40 mln dlr crude oil purchase from
  Saudi Arabia after the Saudis refused to accept credit
  guarantees from the Bank of Brazil and did not disclose
  reasons, a Petrobras official said.
      Export director Carlos Santana told reporters the Saudis
  were the first suppliers of oil to impose such conditions after
  Brazil's decision to halt interest payment of its commercial
  debts last month. The shipment of 2.2 mln barrels represents
  two days of consumption.
      He said the Saudis reported they would no longer accept
  letters of credit from the Bank of Brazil or even from Saudi
  banks and that Brazil would have to obtain credit guarantees
  from leading international banks.
      In February, Brazil had contracted to buy 125,000 bpd from
  the Saudis until June. Saudi Arabia is Brazil's second biggest
  oil supplier, with an average 115,000 bpd. Iraq is the main
  supplier with 235,000 bpd. China comes third, with 58,000 bpd.
      "If the Saudis wish to stop our trade relationship...I am
  sure that if they do, we will be getting dozens of offers from
  elsewhere," Santana added.
      Santana said if the Saudis change their minds and decide to
  respect the terms of the contract, then Petrobras will lift the
  order to cancel the shipment.
      The Saudis had put similar conditions on a previous
  shipment, he added. "We telexed them saying that if they
  insisted, we would rather cancel the contract and buy the
  product elsewhere," Santana said.
      After Petrobras threatened to cancel the contract, the
  Saudis changed their minds and decided to accept the Bank of
  Brazil's credit guarantees, he said.
  

