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Project Financing for an Ultra-Deepwater FPSO Operation Project in the Iracema Norte Area of a Pre-Salt Oil Field in Brazil
Supporting Offshore Resource Development and Strengthening International Competitiveness of Japanese Industries

  • Region: Latin America and the Caribbean
  • Energy and Natural Resources
  • Marine and Aerospace
  • Overseas Investment Loans
  • Guarantees
  • Project Finance
NR/2012-161
March 29, 2013
  1. The Japan Bank for International Cooperation (JBIC, Governor: Hiroshi Okuda) signed today a loan agreement in the aggregate amount of up to 702 million U.S. dollars (JBIC portion) with Cernambi Norte MV26 B.V. (CMV26), a company incorporated in the Netherlands in which MODEC, Inc. (MODEC), Mitsui & Co., Ltd., Mitsui O.S.K. Lines, Ltd., and Marubeni Corporation have equity stakes. The loan, provided as project financing*1, will support a project in which a long-term FPSO*2 system chartering service will be offered by CMV26 to Tupi B.V., a consortium which has a concession in the Iracema Norte*3 area of a pre-salt oil field off the coast of Brazil, and was formed in the Netherlands by Petróleo Brasileiro S.A. (Petrobras), a state-owned oil company in Brazil, and others*4. The loan is cofinanced with The Bank of Tokyo-Mitsubishi UFJ, Ltd. (lead arranger), Mizuho Corporate Bank, Ltd., Sumitomo Mitsui Banking Corporation, Sumitomo Mitsui Trust Bank, Limited and Mitsubishi UFJ Trust and Banking Corporation. The total cofinancing amount is 1,170 million U.S. dollars.
     
  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 150 thousand barrels of crude oil and 280 million cubic feet of gas per day, and store about 1,600 thousand barrels of crude oil. CMV26 and a joint venture which is established mainly by an affiliated company of MODEC in Brazil will provide charter services (leasing and operation and maintenance services) to Tupi B.V. for 20 years. The FPSO vessel will be deployed for developing the Iracema Norte area.
     
  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 reserves has been discovered beneath the geological formation of pre-salt layers of Brazilian offshore waters and have attracted worldwide attention to huge deposits consisting mainly of medium-gravity and light oil. This is the 4th FPSO Operation Project by MODEC for an oil field of pre-salt layers, following Lula field (former Tupi field)*5, Guara field*6, and Cernambi South field*7
     
  4. 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 in the growing degree of difficulty in the development of deeper offshore fields, which is an indispensable component for offshore resource development. Therefore, this loan will lead to the strengthening the international competitiveness of Japanese companies in offshore resource development by helping them acquire and improve technologies, management practices, and knowhow regarding the operation of ultra-deepwater FPSO systems, thereby this financing is expected to contribute to the securing of access to resources and their stable supply of natural resources to Japan.
     
  5. In light of the Basic Act on Ocean Policy and the Basic Plan on Ocean Policy, JBIC will support 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 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.
  2. *2 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.
  3. *3 The Iracema Norte area of a pre-salt oil field, a giant oil field located about 300 kilometers off the south coast of Rio de Janeiro, lies below an underwater pre-salt (rock salt) layer in the Santos Basin.
  4. *4 The consortium constitutes Petrobras, BG Group, Galp Energia in Portugal and China Petrochemical Corporation in China all of which hold groups of companies.
  5. *5 See Press release on March 31, 2010
  6. *6 See Press release on June 29, 2011.
  7. *7 See Press release on March 28, 2012

 

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