- Region: North America
- Energy and Natural Resources
- Overseas Investment Loans
February 17, 2014
The Japan Bank for International Cooperation (JBIC; Governor: Hiroshi Watanabe) signed today, a loan agreement totaling up to USD300 million (JBIC portion) with Japan Canada Oil Sands Limited (JACOS). The loan is cofinanced with Mizuho Bank, Ltd., The Bank of Tokyo-Mitsubishi UFJ, Ltd., and Sumitomo Mitsui Banking Corporation, with the overall cofinancing amount reaching USD600 million.
The loan is intended to finance the further development and production of undeveloped oil sands adjacent to the area currently in production at Hangingstone Mine located in Northern Alberta, Canada, which JACOS holds 75% of participating interests. JACOS is a wholly owned subsidiary of Canada Oil Sands Co. Ltd. that is invested mainly by Japan Petroleum Exploration Co., Ltd.
Canada holds the world's third largest proven reserves of crude oil. It is anticipated that the oil production will largely increase by the progress of development, and the oil sands, which are a non-conventional resource, will account for most of this increase. In this expansion, JACOS will adopt the Steam-Assisted Gravity Drainage (SAGD) *1method that the company has promoted in this business, which is to extract bitumen*2 directly from the underground oil sands layers. JACOS plans to secure the prorated portion of produced bitumen, an initial daily output of approximately 20,000 barrels, according to the equity interest ratio. The loan has important significance in securing the stable supply of important natural resources to Japan, as well as acquiring the experience and knowhow of oil sands development through supporting JACOS'resource development business. This will lead to the possible future development of neighboring oil sands mines and thus, it is expected to contribute to further business development of Japanese companies.
As Japan's policy-based financial institution, JBIC will continue to support the development and acquisition of important natural resources, by drawing on its various financial facilities and schemes for structuring projects and by performing its risk-assuming function.
- *1 SAGD technology is to dig two horizontal wells, and raise fluidity of oil sands upon heating the oil sands layer by injecting high pressure hot steam through the injection well (upper well) and collect condensed water flowing into the producer well (lower well).
- *2 Bitumen is crude oil of high clay which does not have fluidity, and is transported through a pipeline after being diluted usually in condensate.