The traditional relations between Japan and resource-producing countries are primarily characterized as business ties built between the importers and the resource suppliers. This picture has changed. It is increasingly apparent that resource exporting countries earning huge sums of income, due largely to soaring resource prices, are now moving to elevate themselves from the status of resource suppliers. They are diversifying domestic industries, developing infrastructure, and seeking new investment opportunities outside their countries. The era when resources were bought and sold as ordinary transactions is over. What is important for Japan today--a country that depends on foreign countries for energy and mineral resources--is how it can become a partner for assisting the aspirations of resource-endowed countries in various ways that meet their needs. This section will depict JBIC efforts to build such multi-dimensional relations.

Build Multi-Dimensional Relations with Middle-Eastern Countries!

Since 90% of Japan's oil imports come from oil-producing countries in the Middle East, diversifying import sources and promoting overseas oil field development by Japanese firms constitutes a significant item on Japan's national agenda. A key theme in this context is to maintain good relations with oil-producing countries in the Middle East.

In recent years, oil-producing countries in the Middle East are taking steps to diversify domestic industries and develop infrastructure on the strength of abundant revenues benefiting from soaring oil prices. When they need technology transfer for these purposes, they turn to foreign governments and business firms. Thus economic relations between the Middle East and Japan should shift from simple relations between a traditional oil consumer and the suppliers to more multi-dimensional relations—relations where Japan is called on to support industrial diversification by undertaking financial cooperation with energy-related projects and infrastructure development projects in their countries or to jointly make investments with them in third countries. We have entered a new era; if we want to develop good relations with oil-producing countries in the Middle East, it is important to build co-benefiting, "win-win" relations responding to their needs, rather than merely trading oil.

In December 2007, JBIC signed a US$1.3 billion loan agreement in project financing for the power generation and desalination project in the Emirate of Fujairah, a constituting member of the UAE. Electric power and water generated by this project will be supplied to the Emirate of Abu Dhabi through the Abu Dhabi Water & Electricity Company. With its economic growth exceeding 10% annually, the Emirate of Abu Dhabi is projecting a sharp increase in demand for water and power in the coming years. The project, in which a Japanese firm is participating, is aimed at developing the infrastructure that is indispensable for economic development in the UAE by mobilizing private capital. This loan agreement was signed in the presence of Prime Minister Fukuda and the Crown Prince of the Emirate of Abu Dhabi during his official visit to Japan. This loan agreement was signed concurrently with a loan agreement with ADNOC which is aimed at securing long-term imports of crude oil. It was a symbolic event signifying the multi-dimensional relations that exist between Japan and the UAE.

The ties with oil-producing countries in the Middle East will not necessarily be enhanced solely through lending operations. In contrast to loans and guarantees, which will usually support the construction of physical facilities, JBIC is also focusing on knowledge and technical cooperation. For example, JBIC signed a memorandum of understanding for cooperation with the governments as well as government agencies of the Emirates of Abu Dhabi and Dubai of the UAE, Oman and Qatar. A workshop on project finance was also held for Saudi Aramco, the world's largest oil company, to offer the knowhow held by JBIC on project finance. These cooperative efforts will reduce the distance between the Middle East and Japan, foster mutual trust and build multi-dimensional relations with Middle Eastern countries.

Supporting the LNG Supply Chain in Qatar

LNG development requires the construction of special facilities and vessels incorporating advanced technologies: pipelines connecting gas fields with processing facilities, gas liquefaction plants, export terminals and LNG carriers. In addition, to recoup massive investment costs, a common practice is to have prospective buyers who sign long-term LNG off-take agreements before embarking on a natural gas development project. It is also an essential requirement to have negotiations, including price negotiations pertaining to the long-term off-take agreements, with the governments of gas-producing countries. Therefore, comprehensive support encompassing the entire LNG supply chain will lead to stronger ties with gas-producing countries. This is one approach to securing a stable supply of LNG.

Here is a concrete example of how JBIC supported an LNG project. Qatar started LNG exports to Japan in 1996, with the natural gas produced in the North Field, which has the world's largest natural gas reserves as a single gas field, and has since maintained a stable gas supply to Japan. In this project where western oil majors and Japanese trading companies have participated in gas field development, the LNG produced was transported to Japan by LNG tankers owned or operated by Japanese shipping companies and electricity and gas companies. The Government of Qatar is pushing forward this project as the national policy with a view to making the country the world's largest LNG producer. It is thus planning to increase LNG production volume by expanding the project. At the same time, negotiations with Qatar Petroleum, a state-owned oil company, are also a crucial factor in implementing the project.

JBIC has continued to provide financial support for LNG projects in Qatar, since providing the first loan in 1994 for gas field development and the construction of an LNG plant. JBIC-supported projects included infrastructure projects associated with gas field development, such as construction of LNG tankers and port development. It may be said that JBIC has provided cooperation to meet various needs that have emerged in the process of the country's economic development. Continued cooperation for establishing the overall LNG supply chain is a good example of how JBIC has made a significant contribution to building trusting relations between JBIC and Qatar Petroleum, and thus between Japan and Qatar, leading to a stable LNG supply to Japan to date.