Energy and Natural Resource Financing for Development of Shale Oil in U.S.
Supporting Shale Oil Development Project by Japanese Companies

  • Area: North America
  • Energy and Natural Resources
  • Overseas Investment Loans

NR/2012-25
July 20, 2012
  1. The Japan Bank for International Cooperation (JBIC; Governor: Hiroshi Okuda) signed a loan agreement today totaling up to 49 million U.S. dollars (JBIC portion) with JGC Exploration Eagle Ford LLC (JEEF), a wholly-owned U.S. subsidiary of JGC Corporation (JGC). The loan, cofinanced with private financial institutions, is extended to finance a project for acquiring and developing energy and natural resources. The overall cofinancing amount to 70 million U.S. dollars. This is the first loan extended by JBIC to a shale oil project.
     
  2. The loan will fund development and production of shale oil in the Eagle Ford shale oil fields in Texas, of which JGC has a 10% ownership through JEEF.
     
  3. Shale oil is a crude oil contained in the formation of a sedimentary rock called shale, and, like shale gas, its deposits are found in a number of broad areas on the earth, including North America, Europe and Australia. In the United States, many shale oil development projects, including this project, are currently underway.  The operator of this project, Chesapeake Energy Corporation, has abundant experience as an operator in U.S. shale oil and gas production.
     
  4. This loan will support participation in a shale oil development project by Japanese companies, given the prospect of a sharp rise in its production in the coming years. Since Japanese firms acquire knowhow on shale oil development through a project like this, it is considered to help increase their opportunities to participate in U.S. and other foreign shale oil projects going forward. As a result, it will lead to an increase in the independent development ratio through the firm's gaining ownership and it is expected to contribute to Japan's energy security in the future.
     
  5. JBIC will continue to vigorously support Japanese businesses for promoting development and acquisition of energy resources by drawing on its various financial facilities and schemes for structuring projects and performing its risk-assuming function.
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