JBIC Provides Guarantee to Private Syndicated Loan for REPLAN Refinery Modernization Project in Brazil

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February 27, 2002

Japan Bank for International Cooperation (JBIC; Governor: Kyosuke Shinozawa) signed a guarantee agreement, in New York on February 26 (February 25 at EST), for a private syndicated loan totaling up to US$300 million for the REPLAN Refinery Modernization Project to be implemented by Petróleo Brasileiro S.A. (Petróbras) in Brazil.

The loan was provided by private financial institutions, including Sumitomo Mitsui Banking Corporation (agent bank), Fuji Bank, UFJ Bank, Sumitomo Trust and Co., and Tokyo branches of Société Générale, ABN Amro and ING Bank N.V.

With the aim to help make Brazil self-sufficient in petroleum supply by 2005, Petróbras is not only boosting crude oil production, but is promoting modernization of the existing refineries in Brazil. REPLAN Refinery located in the state of San Paulo is the largest refinery in Brazil, and supplies oil products mainly to southeastern Brazil, the economic center of the country. The purpose of the REPLAN Refinery Modernization Project is to: (1) strengthen capability to refine heavy oil produced from the Campos basin, which accounts for most of the domestically produced crude oil; and (2) upgrade the quality of oil products while responding to the stricter environmental laws and regulations.

Petróbras has introduced direct investments from Japanese firms for the development of the Campos basin in recent years, and needs to obtain further stable medium and long term funds from abroad to finance the expansion of its business operations. Meanwhile, observing the steady economic growth of Brazil that remains unharmed by the economic crisis of neighboring Argentina, Japanese private financial institutions intend to provide financing to Brazil. JBIC's provision of guarantee will support the coordination of the needs of the two parties. On one hand, it will help meet the financial needs of Petróbras, which is forging ahead with oil development in cooperation with Japanese firms, while contributing to the expansion of international business operations of Japanese private financial institutions on the other.

JBIC, with its loans and guarantee facility, will continue to support Japanese private financial institutions' medium and long term financing for developing countries.

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