Project Financing for FPSO Operation Project of Sepia Oil Field in 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: Akira Kondoh) signed on March 29, 2018, a loan agreement amounting up to about USD492 million (JBIC portion) with Dutch company Sepia MV30 B.V. (SEPMV30) incorporated by MODEC, Inc. (MODEC), Mitsui & Co., Ltd., Mitsui O.S.K. Lines, Ltd., Marubeni Corporation and Mitsui Engineering & Shipbuilding Co., Ltd based in Japan. The purpose of the loan, provided as project finance^*1, is to finance long-term FPSO^*2 vessel chartering services to be provided to Petróleo Brasileiro S.A. (Petrobras), a state-owned oil company in Brazil, for developing the Sepia oil field^*3 located off the coast of Brazil in which Petrobras holds an interest. The loan is co-financed by Sumitomo Mitsui Banking Corporation (facility agent), ING Bank N.V., Société Générale, Mizuho Bank Ltd., Overseas-Chinese Banking Corporation Limited, the Bank of Tokyo-Mitsubishi UFJ, Ltd. and ABN AMRO Bank N.V. The total co-financing amount is about USD987 million.
     
2. In this project, MODEC will build an FPSO unit with the capacity to produce up to 180 thousand barrels of crude oil per day and 212 million cubic feet of gas per day, and store 1.4 million barrels of crude oil. SEPMV30 will provide FPSO vessel chartering services to Petrobras for 21 years, including leasing, operation and maintenance services.
     
3. As oil companies in a number of countries have been 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. Petrobras, which is engaged in developing many offshore oil fields in Brazil, expressed its intention to focus on offshore oil field development business. MODEC views Brazil as a promising market for the FPSO business. This project is the 10th FPSO vessel chartering service to be provided to Petrobras by MODEC.
     
4. The Japanese government's "Growth Strategy 2017" approved by the Cabinet on June 9, 2017 stipulates, concerning the substantial amount of methane hydrate deposits expected to exist in waters around Japan, that the government will advance the public-private cooperation such as technology development for the development and commercialization. In this project, Japanese underwater energy resource development companies provide an FPSO charter service which is an indispensable component for offshore resource development. Therefore, this loan will lead to the strengthening 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 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.
     
   
5. As Japan's policy-based financial institution, JBIC will continue to support Japanese companies in expanding their business to foreign countries including Africa and Brazil, which are particularly active in marine resources development. with a view to acquiring strategically important resources for Japan as well as maintaining and increasing the international competitiveness of the Japanese marine industry.
     

Note

1. *1 
   Project finance is a financing scheme in which repayments for a loan are made solely from the cash flows generated by the project.
2. *2 
   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.
3. *3 
   This oil field is located in the pre-salt layer of the Santos Basin, which is about 250 kilometers off the southeast coast of the state of Rio de Janeiro.