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Project Finance for LNG Project in Papua New Guinea
Contributing to Stable Energy Resource Supply to Japan by Supporting Development of New LNG Supply Source

  • Region: Oceania
  • Energy and Natural Resources
  • Overseas Investment Loans
  • Project Finance
NR/2009-51
December 16, 2009
  1. The Japan Bank for International Cooperation (JBIC; President & CEO: Hiroshi Watanabe)*1 signed on December 15 (New York time) a loan agreement in the aggregate amount of up to 1.8 billion US dollars for the PNG LNG Project to be implemented in Papua New Guinea (PNG) with its project company, Papua New Guinea Liquefied Natural Gas Global Company LDC. The loan, provided in project financing,*2 was cofinanced with a commercial bank syndicate (including Sumitomo Mitsui Banking Corporation, Mizuho Corporate Bank, Ltd. and The Bank of Tokyo-Mitsubishi UFJ, Ltd.) and overseas export credit agencies (including The Export-Import Bank of the United States, The Export-Import Bank of China, SACE S.P.A. in Italy, Export Finance and Insurance Corporation in Australia) and Nippon Export and Investment Insurance (NEXI).
     
  2. The Project is a large-scale LNG project, and its participating parties include Exxon Mobil Corporation, Nippon Oil Exploration Limited, Oil Search Limited in PNG, Santos Limited in Australia and the PNG Government. It plans to produce 6.6 million tons of LNG per year, as well as crude oil by developing oil and gas fields in the upstream, laying pipelines and constructing LNG liquefaction facilities. About one half of the LNG produced in the Project is expected to be supplied to Japan.
     
  3. Given the prospect of a declining supply of LNG from Indonesia, Japan's largest LNG supply source, and emerging demand for LNG from such countries as China and India, it is increasingly important for Japan to diversify its LNG supply sources and secure new supply sources. Under these circumstances, this loan will support a stable long-term supply of energy resources to Japan by financing the first LNG project in PNG.
     
  4. In this Project, Nippon Oil Exploration Limited has participating interests in energy resource development. Thus the loan will support an overseas resource development project undertaken by a Japanese firm. Since the PNG Government has also participated in this Project, supporting the Project is expected to strengthen ties with a gas-producing country, thereby contributing to securing Japan's access to energy resources into the future.
     
  5. JBIC is committed to providing financial support for facilitating the development and acquisition of interests in strategically important resources by performing project structuring and risk-taking functions that draw on its various financial instruments and schemes.
Note
  1. *1 JBIC is the international wing of the Japan Finance Corporation (JFC; Governor: Shosaku Yasui).
  2. *2 Project finance is a financial structure in which repayments for a loan provided for a project are made exclusively from the cash flows generated by the project, while security for the loan is limited to the project assets, rights and interests.
  3.  

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