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Project Financing for Ichthys LNG Project in Australia
Contributing to Securing Long-Term and Stable Supplies of Energy Resources to Japan through Support for Large-Scale LNG Project Led by Japanese Companies

  • Region: Oceania
  • Energy and Natural Resources
  • Overseas Investment Loans
  • Project Finance
NR/2012-107
December 18, 2012
  1. The Japan Bank for International Cooperation (JBIC; Governor: Hiroshi Okuda) signed today, a loan agreement totaling up to 5 billion U.S. dollars (JBIC portion) with Ichthys LNG Pty Ltd (Ichthys LNG) in Australia. The loan, provided in project financing,*1 is cofinanced with private financial institutions and export credit agencies (ECAs) in other countries,*2 with the overall cofinancing amount reaching 16 billion U.S. dollars. Part of the cofinancing loans provided by private financial institutions is insured or guaranteed by Nippon Export and Investment Insurance (NEXI) or ECAs in other countries.*3 This is JBIC's largest loan (in U.S. dollars) for a single project.
     
  2. In this Project, INPEX CORPORATION (INPEX), TOTAL S.A., a French company, Osaka Gas Co., Ltd., Tokyo Gas Co., Ltd., TOHO GAS Co., Ltd. and Chubu Electric Power Co., Inc., all of which have indirect equity stakes in Ichthys LNG, will develop the Ichthys Gas and Condensate*4 Field off the northwest coast of Western Australia; transport the produced gas through subsea gas pipelines to the onshore liquefaction plant to be built in Darwin, Northern Territory; and produce and sell liquefied natural gas (LNG; annual production capacity: 8.4 million tons), liquefied petroleum gas (LPG) and condensate through Ichthys LNG. This loan is intended to finance the development of the gas and condensate field and production of LNG and other petroleum products in this project.
     
  3. This is the first project for INPEX as a Japanese company to operate the complete process of the project: from development of the gas and condensate field to production of LNG and other petroleum products. INPEX and Japanese power and gas companies have approximately 70% interests in the project and are expected to take delivery of about 70% of LNG produced (about 5.67 million tons per year). The importance of efforts to undertake LNG projects led by Japanese companies is stated in the Japanese government's Strategy for Securing Natural Resources.*5
     
  4. The global demand of LNG is projected to increase due to growing demand in emerging market countries and heightened environmental awareness. In Japan, there have been increasing hopes for a stable supply of LNG in recent years. However, LNG supply from Indonesia, Japan's major LNG supply source, is expected to decrease significantly, and the renewal time is approaching for a number of long-term purchase contracts with other countries. This prospect has made Australia, with its abundant gas reserves and political and economic stability, increasingly important as a supply source of LNG. In this context, supporting Japanese companies for developing energy resources in this project has a significant implication for securing a stable LNG supply to Japan.
     
  5. JBIC will continue to actively support Japanese businesses that promote the development and acquisition of energy resources by drawing on its various financial facilities and schemes for structuring projects and performing its risk-assuming functions.
     
Note
  1. *1 Project finance is a financial scheme in which repayments are made solely from cash flows generated by the project and secured only on the project assets.
  2. *2 Financial institutions participating in cofinancing are 24 Japanese and international private banks, including the following 7 Japanese banks: Mizuho Corporate Bank Ltd., The Bank of Tokyo Mitsubishi UFJ Ltd., Sumitomo Mitsui Banking Corporation, Sumitomo Mitsui Trust Bank Limited, Mitsubishi UFJ Trust and Banking Corporation, Mizuho Trust and Banking Co., Ltd. and Shinsei Bank, Limited. The Export and Import Bank of Korea (KEXIM) and Australia's Export Finance and Insurance Corporation (EFIC) will also participate in cofinancing in this project.
  3. *3 Part of the cofinancing loans provided by private financial institutions is guaranteed by KEXIM and insured by Korea Trade Insurance Corporation (K-sure), Atradius Dutch State Business N.V. (Atradius), Euler Hermes Deutschland AG (Hermes) and Compagnie Française d'Assurance pour le Commerce Extérieur (COFACE).
  4. *4 Condensate is hydrocarbon obtained in the process of extracting and refining natural gas and condenses into hydrocarbon fluids at ordinary temperature and under normal pressure. It has lighter density than ordinary crude oil and can be refined into such petroleum products as gasoline, diesel oil, jet fuel and naphtha.
  5. *5 The Strategy for Securing Natural Resources was reported at the 15th Ministerial Meeting on the Overseas Deployment of Integrated Infrastructure Systems held in June 2012.
  6.  

 

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