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Project Financing for an Ultra-Deepwater FPSO Operation Project in an Offshore Presalt Oil and Gas Field in Brazil
Supporting Offshore Resource Development and Strengthening Japanese Industries’ International Competitiveness

  • Region: Latin America and the Caribbean
  • Energy and Natural Resources
  • Marine and Aerospace
  • Overseas Investment Loans
  • Project Finance
NR/2011-20
June 29, 2011
  1. The Japan Bank for International Cooperation (JBIC, President & CEO: Hiroshi Watanabe)*1 signed on June 28 a loan agreement in the aggregate amount of up to 812 million US dollars with GUARA MV 23 B.V., a company incorporated in the Netherlands in which Mitsui Ocean Development & Engineering Co.,Ltd. (MODEC), Mitsui & Co.,Ltd. and Mitsubishi Corporation have equity stakes. The loan, provided as project financing,*2  will support a project in which a long-term FPSO*3  system chartering service will be offered by GUARA MV 23 B.V. to Guara B.V., a consortium which has a concession in the Guara area (Guara oil field)*4 and was formed in the Netherlands by Petróleo Brasileiro S.A. (Petrobras), a state-owned oil company in Brazil, and others.*5  The loan is co-financed with The Bank of Tokyo-Mitsubishi UFJ, Ltd. (co-lead arranger), Sumitomo Mitsui Banking Corporation (SMBC) (co-lead arranger), Mizuho Corporate Bank, Ltd., ING Bank N.V. and Société Générale. 
     
  2. In this project, MODEC will build an ultra-deep FPSO unit capable of operating 2,000 to 3,000 meters underwater and with the capacity to produce up to 120,000 barrels of crude oil and 180 million cubic feet of natural gas per day, and store 1,600,000 barrels of crude oil. It will be chartered by Guara B.V. (leasing plus operation and maintenance) for 20 years. The FPSO vessel will be deployed for developing the Guara oil field.
     
  3. As oil companies in a number of countries have been actively developing offshore oil fields in recent years, they foresee an increasing need for new FPSO systems, primarily in Latin America (namely Brazil) and the Western African region. In particular, a series of world-class oil and gas reserve discoveries beneath the geological formation of presalt layers of Brazilian offshore waters have attracted worldwide attention on huge deposits consisting mainly of medium-gravity and light oil.
     
  4. As Japan's only operator of FPSO systems, MODEC faces intense competition against other major FPSO operators in the world. Nonetheless, MODEC expects to win business in FPSO projects with Petrobras by strengthening business relations through an FPSO charter service as Petrobras plans for the full-scale development and production of presalt oil and gas fields. This is the second presalt FPSO chartering project following a similar project in the TUPI oil field.*6
     
  5. The Basic Act on Ocean Policy, which came into force in July 2007, and the Ocean Energy and Mineral Resource Development Plan, prepared at a meeting of the Headquarters for Ocean Policy (headed by the Prime Minister) in March 2009 based on the cabinet decision on the Basic Plan on Ocean Policy in March 2008 stipulates: “Japan should aim to develop methane hydrate and submarine hydrothermal fields in waters around Japan on a commercial basis in 10 years (by 2019).” In this project, Japanese underwater energy resource development companies provide an FPSO charter service, which is an indispensable component for offshore resource development. Therefore, this loan will lead to the strengthening the international competitiveness of Japanese firms in offshore resource development by helping them acquire and improve technologies, management practices and knowhow regarding the operation of ultra-deepwater FPSO systems, thereby indirectly contributing to the securing of access to resources and their stable supply to Japan in the future.
     
  6. Under the Basic Act on Ocean Policy and the Basic Plan on Ocean Policy, JBIC is committed to supporting the development and acquisition of strategically important resources to Japan as well as the maintenance and improvement of the international competitiveness of Japanese marine industries.
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 whereby the repayment of a loan extended to a project relies on cash flows generated by the operation of the project, with collateral limited to project goods and other assets.
  3. *3 A floating production, storage and offloading (FPSO) system is a floating vessel for the first stage processing of crude oil produced at the oil well, which separates associated gas and water, and for the storage and offloading of oil.
  4. *4 The Guara field, located 310 kilometers off Rio de Janeiro, lies below an underwater presalt (rock salt) layer in the Santos Basin. Underneath this presalt layer lies huge oil reserves.
  5. *5 The consortium constitutes Petrobras, British Gas Group and Spain’s Repsol, YPF, all of which hold groups of companies.
  6. *6 See Press Release dated on March 31,2010.

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