JBIC Loan for Australian LNG Project to Ensure Stable Natural Gas Supply to Japan

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June 25, 2008

Japan Bank for International Cooperation (JBIC; Governor: Koji Tanami) signed on 24 June a loan agreement totaling up to US$1 billion with Woodside Finance Limited, a financial subsidiary of Australia's largest oil and gas exploration company Woodside Petroleum Limited (Woodside). The loan was provided through cofinancing with a syndicate of eight private financial institutions (lead arranger: Bank of Tokyo-Mitsubishi UFJ, Ltd.) which has signed a loan agreement totaling up to US$500 million with Woodside Finance Limited. The aggregate loans will finance the Pluto LNG Project in Western Australia.

This is a joint project of Woodside, the Kansai Electric Power Co., Inc. and Tokyo Gas Co., Ltd. to develop the Pluto and Xena gas fields off Karratha in Western Australia, transport gas through an undersea pipeline to a liquefied natural gas (LNG) plant to be constructed in the Burrup Peninsula and produce and sell LNG. The proceeds of the loan will be applied to gas field development, and construction of a pipeline, an LNG plant, and loading facilities. Kansai Electric and Tokyo Gas will purchase 3.75 million metric tons of LNG per year, approximately 90% of LNG produced by this project under at least 15-year period sales contracts.

The prospects of global energy balance are increasingly uncertain due to various reasons such as rapid demand growth in the emerging economies. Considering this development, Australia, given its geological proximity to Japan and stable politics and economy, is increasingly important for Japan as a resource supply country. This is particularly true of natural gas, since LNG imports from Indonesia, its current largest supplier to Japan, are projected to decrease significantly in the near future. In these circumstances, this project has a major significance for Japan's energy security as this project will serve as a new large supply source for Japan.

The three companies, Woodside, Kansai Electric and Tokyo Gas, are jointly undertaking the large-scale natural gas development project. This loan also aims to support the resource development business of Japanese electricity and gas companies for helping its effective and efficient implementation. Woodside is an important energy firm for securing a stable supply of energy resources to Japan, operating the North West Shelf Venture that has annually supplied around 10 million metric tons of LNG to Japan for more than 20 years.*1 This loan for the Pluto LNG project is expected to strengthen relations with Woodside and to contribute to a more stable supply of energy resources.

JBIC will contribute to Japan's energy security by supporting resource development projects in Australia that are important for Japan by utilizing a range of financial instruments.

*1 - The North West Shelf Venture is one of the world's largest natural gas and oil development projects. JBIC (formerly the Export-Import Bank of Japan) extended its first ever project financing to this project. The project was jointly undertaken by Woodside and five international oil development companies (MIMI (Mitsui & Co., Mitsubishi Corporation), BHP Billiton, BP, Chevron and Shell), and most of its LNG output has been exported to Japan since the start of production in 1989. Currently, the project accounts for 16% of Japan's total annual LNG imports.

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