Financing Acquisition of Interests in and Development of Shale Gas
JBIC’s First Loan to Shale Gas Project

  • Area: North America
  • Energy and Natural Resources

Shale gas drilling rig (courtesy of Mitsui & Co., Ltd.)

Shale gas is a natural gas contained in shale*1, and is one of the main types of unconventional natural gas. Previously, its production was marginal and commercialization was considered difficult. However, technological advances, such as horizontal drilling and hydraulic fracturing, have made low-cost production possible and its development has been rapid, especially in the United States.
JBIC signed a loan agreement totaling up to 700 million dollars with Mitsui E&P USA LLC (MEPUSA), a subsidiary established by Mitsui & Co., Ltd. and Mitsui Oil Exploration Co., Ltd. The loan, cofinanced with private financial institutions, finances MEPUSA acquiring a 15.5% interest in the Marcellus Shale area in Pennsylvania from Anadarko Petroleum Corporation, a U.S. corporation, and participating in its development.
For Japanese industries, the acquisition of interests in the U.S. natural gas market will diversify their supply portfolio and strengthen their corporate ability to balance demand and supply. In addition, developing unconventional gas in the United States will help relieve the tight Asian LNG market and contribute to developing a more stable market. As there are vast proven reserves of shale gas around the world, by acquiring knowledge and experience in shale gas development, Japanese firms are expected to have future opportunities to participate in shale gas development projects in Asia and other regions.


Note
  1. *1Shale is a sedimentary rock composed of mud, and contains organic matters, from which air and gas can be extracted.
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