Project Financing for Ultra-Deepwater FPSO Operation Project in Carioca area of Brazil
Supporting Offshore Resource Development Business and Strengthening International Competitiveness of Japanese Companies

• Region: Latin America and the Caribbean
• Energy and Natural Resources
• Marine and Aerospace
• Overseas Investment Loans
• Project Finance

1. The Japan Bank for International Cooperation (JBIC, Governor: Hiroshi Watanabe) signed on July 17 a loan agreement in the aggregate amount of up to about USD564 million (JBIC portion) with Carioca MV27 B.V. (CMV27), 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 system chartering service will be offered by the CMV27 to Guara B.V., a consortium^*2 which has a concession in the Carioca area^*3 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. The loan is cofinanced with The Bank of Tokyo-Mitsubishi UFJ, Ltd. (lead arranger), Mizuho Bank, Ltd., Sumitomo Mitsui Banking Corporation, Sumitomo Mitsui Trust Bank, Limited, Mitsubishi UFJ Trust and Banking Corporation, and ING Bank N.V. The total cofinancing amount is about USD1,128 million.
    
2. In this project, MODEC will build an ultra-deep FPSO^*4 unit capable of operating 2,000 to 3,000 meters underwater and with the capacity to produce up to 100 thousand barrels of crude oil and 177 million cubic feet of gas per day, and store about 1,600 thousand barrels of crude oil. CMV27 will provide charter services (leasing and operation and maintenance services) to Guara B.V. for 20 years. The FPSO vessel will be deployed for developing the Carioca area.
    
3. As oil companies globally are 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 5th FPSO Operation Project by MODEC for an oil field of pre-salt layers, following Lula field (former Tupi field), Guara field, Cernambi South field, and Iracema North field.
    
4. The Basic Plan on Ocean Policy^*5 stipulates, concerning the substantial amount of methane hydrate endowment expected to exist in waters around Japan, that Japan should advance the technology development considering the international situation, for starting the development projects led by a private sector on a commercial basis in 10 years (in the mid-2020s). While marine resources development of deeper offshore fields is becoming more sophisticated, in this project, Japanese underwater energy resource development companies provide an FPSO charter service in the development of deeper offshore fields, which is growing in its degree of difficulty, and is an indispensable component for offshore resource development. Therefore, this loan will lead to the strengthening of 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, including marine resources developments in waters around Japan.
    
5. In light of the Basic Act on Ocean Policy and the Basic Plan on Ocean Policy, as Japan's policy-based financial institution, JBIC will continue to support the development and acquisition of strategically important resources to Japan, as well as the maintenance and strengthening of the international competitiveness of Japanese marine industries, by providing financial support to Japanese companies' business development overseas, including Africa and Brazil, where marine resources development is expected to be active.

Note

1. *1 Project finance is a financing scheme in which repayments are made solely from cash flows generated by the project and secured only on the project assets.
2. *2 The consortium constitutes Petrobras, BG Group in England, Repsol S.A in Spain and China Petrochemical Corporation in China all of which hold groups of companies.
3. *3 The Carioca 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 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.
5. *5 The Ocean Energy and Mineral Resource Development Plan was established based on The Basic Act on Ocean Policy, which came into force in July 2007, and adopted at the cabinet meeting in April 2013.