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Equity Participation and Loan for Wheatstone LNG Project in Australia
Supporting Japanese Firm's Participation in LNG Project

  • Region: Oceania
  • Energy and Natural Resources
  • Overseas Investment Loans
  • Equity Participations
NR/2012-29
July 31, 2012
  1. The Japan Bank for International Cooperation (JBIC; Governor: Hiroshi Okuda) signed an agreement today with Tokyo Electric Power Company (TEPCO), Mitsubishi Corporation (MC) and Nippon Yusen Kabushiki Kaisha (NYK Line) (collectively the "Private Shareholders"), and Pan Pacific Energy K.K. (PE) (its shareholders are the Private Shareholders and Japan Oil, Gas and Metals National Corporation (JOGMEC)) to acquire from PE up to 273 million U.S. dollars of preferred stocks that carry no voting right. Apart from this equity participation, JBIC also signed a loan agreement totaling up to about 1,927 million U.S. dollars (JBIC portion) with PE Wheatstone Pty Ltd (PEW), where TEPCO and PE have equity stakes. The loan is cofinanced with private financial institutions.

  2. In the Wheatstone LNG Project, PEW jointly undertakes with Chevron, Royal Dutch Shell, Kyushu Electric Power Co., Inc. (Kyushu Electric) and other sponsors, to transport the natural gas produced in the Wheatstone Field, Iago Field and nearby fields, located northwest off Western Australia, to Ashburton North, Western Australia, and to produce a maximum of 8.9 million tons of liquefied natural gas (LNG), etc. each year.

  3. The equity participation and loan will finance PEW in acquiring a 10% interest in the upstream natural gas fields to participate in their development, and an 8% interest in liquefaction facilities from Chevron to produce LNG and associated products. Based on its acquired interest, PEW will lift about 700,000 tons of LNG per year, all of which will be purchased by TEPCO. Separately, TEPCO plans to take delivery of about 3.5 million tons of LNG per year based on long-term offtake contracts*1. Thus, combined with the amount commensurate with an interest of PEW in the Project, TEPCO will take delivery of a total of about 4.2 million tons of LNG per year. Apart from the equity participation and the loan, JBIC made a loan to a local subsidiary of Kyushu Electric to finance its participation in the Wheatstone LNG Project in November 2011. In this deal, Kyushu Electric will take delivery of about 830,000 tons of LNG per year from this Project*2. Thus the overall amount of LNG to be delivered to Japan, including the amounts delivered to TEPCO and Kyushu Electric, is expected to reach 7 million tons per year.

  4. In the aftermath of the Great East Japan Earthquake in March 2011, TEPCO, being bound by funding constraints, is unable to independently participate in this Project. Thus, JBIC has made an equity investment and provided a loan for part of the participation and development funds for this Project. Thereby, JBIC will contribute to strategically securing important energy resources in public-private partnerships, as well as a stable electric supply for Japan.

  5. Global LNG demand is projected to increase well into the future, due to increasing demand in emerging markets and to increasing awareness of the environment. This prospect has been growing expectations in Japan for a stable procurement of LNG in recent years. On the other hand, it is foreseen that the supplies from Southeast Asian countries, traditionally Japan's main LNG suppliers, will decrease in the coming years. Coincidentally, Japan is entering a period when a number of the long-term offtake contracts have to be renewed one after another with other LNG supply countries. Under these circumstances, Australia, with its abundant reserves and stable political and economic conditions, has become increasingly important as a new LNG supplier. Thus, this Project has a significant implication for securing a stable LNG supply source to Japan.

  6. JBIC will continue to support the development and acquisition of interests in natural gas and crude oil, etc. by Japanese firms, thereby contributing to Japan's energy security.
     
Note
  1. *1 This amount is about 20% of the annual LNG purchased by TEPCO under its long-term offtake contracts.
  2. *2 See Press Release on November 14, 2011.

 

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