- Region: The Middle East
- Energy and Natural Resources
- Machinery and Equipment
- Export Loans
February 7, 2005
- Japan Bank for International Cooperation (JBIC; Governor: Kyosuke Shinozawa) signed today a loan agreement totaling up to 311 million dollars with the Bahrain Petroleum Company B.S.C. (Bapco). The loan is co-financed with The Hong Kong and Shanghai Banking Corporation, Tokyo Branch (the agent bank), BNP Paribas, Tokyo Branch, and Mizuho Corporate Bank, Ltd.
- The proceeds of this buyer's credit will be used to purchase a set of diesel desulfurization equipment from JGC Corporation, a Japanese exporting company, for the existing oil refinery located in the Sitrah region in eastern Bahrain. The loan will thus financially support exports of advanced environmental conservation and improvement equipment from Japan.
- For the oil-producing Kingdom of Bahrain, the oil and gas-related sector, which in 2003 accounted for a 75% share of total exports, is not only the largest industry but the top source of foreign currency revenue as well. There is a growing tendency in the oil and gas sector across the world toward tighter environmental regulations, as attested by the call by the European Union to lower the sulfur content of diesel under the 10ppm level from 2009. Facing such changing international circumstances, Bapco, the oil development and refinery enterprise wholly owned by the government, has been advancing a strategic investment programme, of which this low sulfur diesel production project constitutes one of the pillars. The loan will enable Bapco to reduce sulfur contents of diesel from the current 500ppm to 10ppm, a level that meets the environmental standard of advanced countries, by installing the desulfurization equipment, thereby helping Bapco to cope with the tighter environmental regulations and to create value-added oil products.
- The buyer's credit, the first direct loan commitment that JBIC has provided for the Kingdom of Bahrain, has realized the provision of a loan without government guarantee by arranging a scheme whereby revenues from the sales of oil products are set aside for the purpose of repayment with a view to meeting the needs of the government of Bahrain. The loan is thus expected to help strengthen ties with the Bahrain government. It will also serve to enhance foreign currency revenue for Bahrain by strengthening the export competitiveness of oil products and expanding the sales market, thereby eventually contributing to the country's sustainable economic growth.