Energy giant back on PM's agenda

PM John Key said he also wanted to get Ms Rousseff's views on Brazil's economy. Photo / AP

Key rules out incentives but says Brazil's Petrobras is welcome to resume operations in New Zealand.

Prime Minister John Key says he will raise the possibility of Brazilian energy company Petrobras returning to New Zealand when he meets the country's President, Dilma Rousseff, today.

Mr Key flew to Brasilia this morning for the meeting - the first time he has met Ms Rousseff, who was chairwoman of the Brazilian oil company until 2010 when she stood down to run for President.

Mr Key said he wanted to encourage Petrobras to return to New Zealand after it gave up its exploration permits, including the Raukumara Basin, last year. Mr Key said Petrobras had given up many of its other speculative ventures internationally at the same time.

"We will certainly say to the President that we think New Zealand is a good place for Petrobras to be involved and that they are welcome in New Zealand if they want to come. They've given back their licence, but that shouldn't deter them in the future."

He ruled out offering any incentives for such a move.

Mr Key said he also wanted to get Ms Rousseff's views on Brazil's economy, which had grown strongly until last year but then slowed to 1 per cent.

"Brazil is powerful so they are very much a middle power, but a leader in Latin America."

The two will also discuss New Zealand's bid for a seat on the Security Council in 2015 and Trade Minister Tim Groser's campaign to head the World Trade Organisation. However, Brazil had its own candidate for that role, as did Mexico - another country Mr Key visited on his Latin American tour.

Mr Key was also due to meet Ms Rousseff's predecessor, Luiz Incio Lula da Silva, who was President from 2003 to 2011, last night. He said he was hoping to discuss the issues of the region with the former President, whom he had met before.

"He's a very engaging, very entertaining much-loved former President."

In the past, Brazil has accused Fonterra of dumping milk powder in the Brazilian market and imposed high tariffs and anti-dumping duties. Mr Key said that had no practical effect because New Zealand had not exported milk powder to Brazil since 2007. However, it remained an issue on principle.

"It's a reputational issue that we don't like. They are not dumping milk powder in this market."

He said Brazil tended to produce all its milk locally, but the topic might be mentioned and Mr Groser would raise it with his counterpart.

The meeting with Ms Rousseff will effectively be the end of Mr Key's tour, although he also squeezed in a Fonterra showcase and International Education meeting last night.

He also met airline bosses to assess the possibility of more direct air links between Latin America and New Zealand.