Energy and Natural Resources Finance for the Acquisition of Interests in Shale Gas in the U.S.
First Loan to Shale Gas Project

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

1. The Japan Bank for International Cooperation (JBIC; President & CEO: Hiroshi Watanabe)^*1 signed today a loan agreement totaling up to 700 million US dollars with Mitsui E&P USA LLC (MEPUSA), a subsidiary established by Mitsui & Co., Ltd. ("Mitsui") and Mitsui Oil Exploration Co., Ltd., ("MOECO").
    
2. The loan will finance MEPUSA acquiring a 15.5% interest in the Marcellus Shale area in Pennsylvania from Anadarko Petroleum Corporation and for participating in its development. This is the first loan JBIC has provided for a shale gas project.
    
3. Shale gas is a natural gas contained in shale, and is one of main types of unconventional natural gas.  Previously, its production was marginal and commercialization was considered difficult.  However, technological advances, such as horizontal drilling and hydraulic fracturing, have made low-cost production possible and its development has been rapid, especially in the United States.  In fact, more than 10% of US natural gas supply is now estimated to come from shale gas, with oil majors and newly participating firms vigorously engaging in the shale gas business in the United States. 
    
4. For Mitsui and MOECO, the acquisition of interests through MEPUSA in the US natural gas market, a huge and flexible market, will diversify their supply portfolio and strengthen their corporate ability to balance demand and supply.  In addition, developing unconventional gas in the U.S. will help relieve the tight Asian LNG market and contribute to developing a more stable market, which is beneficial for Japanese LNG buyers. As there are vast proven reserves of shale gas around the world, by acquiring knowledge and experience in shale gas development, Japanese firms are expected to have future opportunities to participate in shale gas development projects in Asia and other regions.  
    
5. This loan will support the acquisition of interests in shale gas, which has become a major new source of natural gas in recent years, thereby contributing to securing energy resources and their stable supply to Japan.  JBIC will continue to actively support Japanese firms acquire interests in crude oil and natural gas for Japan’s energy security.

Note

1. *1 JBIC is the international wing of the Japan Finance Corporation (JFC; Governor: Shosaku Yasui).