- Region: Africa
- Energy and Natural Resources
- Overseas Investment Loans
September 29, 2008
- Japan Bank for International Cooperation (JBIC; Governor: Koji Tanami) signed on September 25 a loan agreement totaling up to US$500 million with Egyptian Offshore Drilling Company S.A.E. (EODC). The loan was provided in cofinancing with a bank syndicate led by the Hongkong and Shanghai Banking Corporation Limited(HSBC), Tokyo Branch and others as lead arrangers.
- The loan will finance a project where EODC procures equipment necessary for developing offshore gas fields in Egyptian waters, and offers it in the long term for use in gas development. This is a Japanese company-led investment project undertaken by EODC, a project company set up by Toyota Tsusho Corporation and two governmental oil and gas companies: the Egyptian Natural Gas Holding Company (EGAS) and Ganoub El-Wadi Petroleum Holding Co. (GANOPE).
- Oil production in Egypt has been declining since the first half of the 1990s. International Energy Agency (IEA) projected that the country could shift towards being a net oil importer around 2015. By contrast, its natural gas output has been increasing at a fast pace in recent years, turning it into a net exporter of natural gas in 2004. Currently, Egypt ranks as the 17th largest natural gas producer in the world, according to the BP Statistical Review of World Energy 2008. In this context, the Egyptian government aims to expand natural gas production and exports. However, brisk resource development activities have caused a shortage of drilling rigs and other equipment indispensable for gas development. The project will alleviate this bottleneck to expansion in natural gas production, thereby making a significant contribution to Egypt's energy policy to expand production of natural gas for exports.
- Given increasingly tight global supplies of resources, strengthening ties with resource-endowed countries is high on the Japanese agenda. Against this background, JBIC signed in September 2007 Memorandums of Understanding (MOU) aimed at strengthening mutual ties with Egyptian General Petroleum Corporation (EGPC) and EGAS to build cooperative relations for developing the oil and gas businesses in Egypt. This loan scheme relies on the creditworthiness of EGPC and EGAS as part of the measures to secure the loan. JBIC intends to promote dialogue and further enhance business relations with them through consultations based on these MOUs.
- JBIC will continue to support Japanese business activities in Africa through loans extended to manufacturing, resource development, power, port and other projects.