Energy and Natural Resource Financing for Wheatstone LNG Project in Australia
Supporting Japanese Electric Company’s Participation in LNG Project

• Region: Oceania
• 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 400,428 thousand U.S. dollars (JBIC portion) with Kyushu Electric Wheatstone Pty Ltd. (KEW), an Australian subsidiary of Kyushu Electric Power Co., Inc. (Kyushu Electric Power). The loan is cofinanced with private financial institutions. 
    
2. This loan will finance the project where Kyushu Electric Power joins through KEW with Chevron, Royal Dutch Shell and other sponsors for the project that transports the natural gas produced in the Wheatstone Iago Field and nearby fields, located northwest off Western Australia, to Ashburton North, Western Australia and produce a maximum of 8.9 million tons of liquefied natural gas (LNG) per year.  
    
3. This loan will finance KEW for acquiring a 1.83% interest in the upstream (i.e., development of natural gas fields) and a 1.464% interest in liquefaction facilities from Chevron. Since this is the first interest acquisition of an LNG project for Kyushu Electric Power, it plans to take delivery of 830,000 tons—about 20% of its annual LNG procurement—a combined amount of offtake based on this interest acquisition deal (130,000 tons per year) and a long-term offtake contract (700,000 tons per year).  
    
4. LNG supply and demand situation in the world is projected to get tighter over the medium and long term in view of expanding demand in emerging market countries and increasing awareness of the environment. In Japan, there has been growing expectations on a stable procurement of LNG in recent years. On the other hand, the supply from Indonesia, traditionally the main LNG supplier, is expected to decrease sharply in the coming years. Coincidentally, Japan is entering a period when a number of the long-term offtake contracts have to be renewed with other LNG supply countries.  Under these circumstances, there is growing importance of Australia as an LNG supplier, given its abundant reserves and stable political and economic conditions.  This project has thus an important implication from the point of view of Australia becoming a new LNG supply source to Japan and the securing of a stable supply of LNG.
    
5. JBIC will continue to provide positive support for acquisition of interests in natural gas and crude oil by Japanese business firms, thereby contributing to Japan's energy security.

Note

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