JBIC Signs Facility Agreement with ADNOC
Securing long-term supply of crude oil and strengthening strategic partnership with Abu Dhabi
Region: The Middle East
Energy and Natural Resources
January 16, 2018
The Japan Bank for International Cooperation (JBIC; Governor: Akira Kondoh) signed on January 15, 2018 a facility agreement amounting up to USD2.1 billion (JBIC portion) with Abu Dhabi National Oil Company (ADNOC) in the Emirate of Abu Dhabi (Abu Dhabi) in the United Arab Emirates (UAE), in the presence of His Excellency Mr. Hiroshige Seko, Japan's Minister of Economy, Trade and Industry, and His Excellency Dr. Sultan Ahmed Al Jaber, Member of the Supreme Petroleum Council. This facility is co-financed by Sumitomo Mitsui Banking Corporation (agent bank), Tokyo Branch of the Hongkong and Shanghai Banking Corporation Limited (HSBC) and Mizuho Bank, Ltd., bringing the total co-financing amount to USD3 billion.
ADNOC, a state-run oil company wholly owned by the government of Abu Dhabi, conducts oil and gas business in Abu Dhabi, which produces most of the oil and gas in the UAE. This facility is intended to provide necessary support to ADNOC in ensuring stable imports of crude oil by Japanese companies. This is the fifth loan*1 that JBIC has provided for ADNOC with an aim to securing a long-term supply of oil to Japan.
Abu Dhabi has been a stable and important supply source of crude oil to Japan for more than 30 years. Additionally, Abu Dhabi allows foreign oil companies to conduct business in the emirate based on oil concession agreements. Abu Dhabi is important for Japan's energy resource strategy for these reasons. Up to now, JBIC has signed with ADNOC memoranda of understanding (MOUs) in the oil and gas sector.*2 In November 2017, JBIC signed an MOU with ADNOC aimed at further strengthening the comprehensive strategic partnership between Abu Dhabi and Japan. Under this MOU, JBIC and ADNOC has built a mutual understanding of the significance of granting new oil concessions to Japanese oil development companies with operations in Abu Dhabi as well as renewing their existing oil concessions.
Approximately 60% of the offshore Abu Dhabi oil field concessions owned by Japanese companies is scheduled to expire in March 2018. Under such circumstances, this facility aims to support Japanese companies in renewing their existing concessions in the offshore oil fields in Abu Dhabi as well as acquiring new concessions in accordance with the MOU signed in November 2017. This facility will also help to secure a stable energy supply to Japan through the acquisition of energy resources by Japanese companies and the strengthening of Japan's relationships with ADNOC as well as the UAE, which is an important country in terms of Japan's energy resource strategy.
As a Japanese policy-based financial institution, JBIC will continue to provide financial support to Japanese companies in developing and acquiring energy resources, in order to secure a stable energy supply to Japan, by drawing on its various financial instruments for structuring projects and expanding its risk-taking ability.