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Energy and Natural Resource Financing for Gorgon LNG Project in Australia
Supporting Japanese Gas Company’s Participation in Energy Resource Development Project

  • Region: Oceania
  • Energy and Natural Resources
  • Overseas Investment Loans
  • Project Finance
NR/2011-81
March 23, 2012
  1. The Japan Bank for International Cooperation (JBIC; President & CEO: Hiroshi Watanabe)*1signed today a loan agreement totaling up to 211.4 million U.S. dollars (JBIC portion) with Osaka Gas Gorgon Pty Ltd (OGG), a wholly-owned subsidiary of Osaka Gas Co., Ltd. (Osaka Gas) in the Commonwealth of Australia. The loan, provided in project financing,*2 is cofinanced with The Bank of Tokyo-Mitsubishi UFJ, Ltd. (lead arranger). The overall cofinancing amounts to 302 million U.S. dollars.
     
  2. This is one of the world's largest-scale liquefied natural gas (LNG) projects where Osaka Gas (through OGG) and 5 other companies comprising Chevron Corporation (Chevron), Exxon Mobil Corporation, Royal Dutch Shell Plc, Tokyo Gas Co., Ltd. and Chubu Electric Power Co., Inc. jointly develop Gorgon, Jansz and other large-scale gas fields off the northwest coast of the state of Western Australia and transport gas through an undersea pipeline to a liquefaction plant on Barrow Island located in the same state. The plant is expected to produce and sell up to 15 million tons of LNG annually from the year 2014.
     
  3. This loan will finance OGG for developing this Project. The aggregate of the amount of LNG which Osaka Gas takes from Chevron (1,375 thousand tons per year) and the amount which OGG has the right to take delivery of corresponding to OGG's interest in this Project (187.5 thousand tons per year), totaling 1,562.5 thousand tons, is equivalent to about 20% of the LNG purchased annually by Osaka Gas.
     
  4. The global demand of LNG is projected to increase due to growing demand in emerging market countries and heightened environmental awareness. In Japan, there have been increasing hopes for a stable supply of LNG in recent years. However, LNG supply from Indonesia, Japan's major LNG supply source, is expected to decrease significantly, and the renewal time is approaching for a number of long term purchase contracts with other countries. This prospect has made Australia, with its abundant gas reserves and political and economic stability, increasingly important as a supply source of LNG. In this context, supporting Japanese companies for developing energy resources in this project has a significant implication for securing a stable LNG supply to Japan.
     
  5. This loan will support a Japanese gas company's participation in an energy resource development project in Australia, one of Japan's most important energy resource supply sources, and its stable purchase of LNG. JBIC will continue to actively support Japanese companies for acquiring interests in natural gas and crude oil and for developing these resources, thereby contributing to Japan's energy security.
     
Note
  1. *1 JBIC is the international wing of the Japan Finance Corporation (JFC; Governor: Shosaku Yasui).
  2. *2 Project finance is a financing scheme in which repayments are made solely from cash flows generated by the project and secured only on the project assets.

 

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