- Region: North America
- Energy and Natural Resources
- Overseas Investment Loans
October 9, 2012
- The Japan Bank for International Cooperation (JBIC; Governor: Hiroshi Okuda) signed on October 5 two loan agreements, one amounting up to 660 million U.S. dollars (JBIC portion) with Sumitomo Corporation (SC) and another amounting up to 770 million U.S. dollars (JBIC portion) with Summit Discovery Resources III LLC (SDR III), a subsidiary of SC in the United States. The loans are cofinanced with private financial institutions, each totaling up to 1,100 million U.S. dollars.
- These two loans are intended to finance a project where SC, through SDR III, acquires 30% interest in tight oil reserves in the Permian Basin in Texas, owned by Devon Energy Corporation, the U.S.-based natural gas and oil producers for developing and producing tight oil.
- Tight oil is extracted from sandstone, limestone and shale (sedimentary rock) formations with low-permeability, using the same technologies (horizontal drilling and hydraulic fracturing, etc.) used in shale oil and gas development. This extraction is different from the conventional method of developing and producing crude oil from wells naturally stored in the stratum. The fact that Japanese companies will acquire knowhow on tight oil development through this project will help Japanese companies expand opportunities to participate in shale oil and gas projects which are expected to grow in number, and increase the ratio of energy resources independently developed by Japanese companies. Thus, this is expected to contribute to Japan's energy security.
- JBIC will continue to actively support Japanese businesses and promote the development and acquisition of energy and mineral resources by drawing on its various financial facilities and schemes for structuring projects, and by performing its risk-assuming function, thereby contributing to Japan's energy security.