- Region: North America
- Energy and Natural Resources
- Overseas Investment Loans
- Project Finance
August 7, 2014
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The Japan Bank for International Cooperation (JBIC; Governor: Hiroshi Watanabe) signed on August 6, a loan agreement, in project financing*1, totaling up to USD2.5 billion (JBIC portion) with Cameron LNG, LLC (Cameron). The loan is cofinanced with private financial institutions including the following 11 Japanese private financial institutions; The Bank of Tokyo-Mitsubishi UFJ, Ltd., Sumitomo Mitsui Banking Corporation, Mizuho Bank, Ltd., Sumitomo Mitsui Trust Bank, Limited, Mitsubishi UFJ Trust and Banking Corporation, The Norinchukin Bank, Shinsei Bank, Limited., Aozora Bank, Ltd., Shinkin Central Bank, The Chiba Bank, Ltd. and The Shizuoka Bank, Ltd. The part of cofinanced portion is insured by Nippon Export and Investment Insurance (NEXI).
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This loan will finance Cameron's construction and production of LNG made from shale gas and conventional gas produced in the U.S., upon a new construction of a liquefaction plant (with planned annual production of 12 million tons) in Louisiana, the United States. Cameron is invested by Mitsui & Co., Ltd. (Mitsui), Mitsubishi Corporation (MC), Nippon Yusen Kabushiki Kaisha, Sempra Energy, a U.S. company, and GDF SUEZ S.A. (GDF SUEZ), a French company. Mitsui, MC and GDF SUEZ, upon obtaining the liquefaction plant use rights as LNG tollers will sell LNG to Japanese utility companies and others.
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After the Great East Japan Earthquake, the environment of Japan's energy supply has become increasingly severe. Especially, it is becoming important for Japan's policy issue to secure stable supply of and to reduce procurement cost of LNG that consists of over 40% of Japan's power energy mix at present. The promotion of diversification of LNG procurement sources, including the U.S., and LNG pricing formula has been touted in the "Strategic Energy Plan" approved by the Cabinet in April 2014. This is the first project to export LNG from the lower 48 U.S. to Japan based on a long-term contract using the pricing formula linked to the U.S. gas market index, which is different from the existing LNG pricing linked to crude oil price. This project contributes to the promotion of diversifying LNG procurement sources and pricing formula. Thus, the support for this project by JBIC will contribute to the securing of a stable supply of energy resources to Japan, as well as the steady implementation of the energy policy of Japan.
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As Japan's policy-based financial institution, JBIC will continue to financially support the acquisition of interests and development of energy resources by Japanese companies, by drawing on its various financial facilities and schemes for structuring projects, and performing its risk-assuming function.
Note
- *1 Project finance is a financing structure in which repayments of the loans are made solely from cash flows generated by the project and secured only by the project assets.