Loan for Tangguh LNG Project in Indonesia

abarrelfullabarrelfull wrote on 21 Dec 2011 12:02

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August 2, 2006

Japan Bank for International Cooperation (JBIC; Governor: Kyosuke Shinozawa) signed on August 1st a loan agreement totaling up to US$1.2 billion with Japan International Finance Management (Tangguh) Corporation, a project company set up by Japanese sponsors, to finance the Tangguh LNG Project.

The Project, which aims to develop natural gas fields in West Irian Jaya and process their output into LNG, is undertaken by Mitsubishi Corporation, Nippon Oil Exploration Limited (NOEX), LNG Japan Corporation (a subsidiary of Sumitomo Corporation and Sojitz Corporation), INPEX Corporation, Kanematsu Corporation, Overseas Petroleum Corporation (a subsidiary of Mitsui & Co., Ltd.), Japan Oil, Gas and Metals National Corporation (JOGMEC), BP p.l.c. and China National Offshore Oil Corporation (CNOOC).

Under this Project, which is the first large project being undertaken under the new oil and gas law in Indonesia, three blocks of gas field in the Berau Bay are developed together and LNG is produced in gas liquefaction facilities (annual capacity: 3.8 million tons x 2 trains) and sold. Japanese participants have a combined total of 45.9% share (based on aggregated output from three blocks of gas field) in this Project. JBIC supported this Project to strengthen its ties with Indonesia, which is the largest LNG exporter for Japan, thereby serving to secure a stable supply of energy resources to Japan.

Currently, increasing the supply of natural gas for domestic use is high on the national agenda because Indonesia has to cut back on the fiscal burden of domestic oil subsidies, while setting aside adequate crude oil for exports. Thus, the government would like to give priority to gas supply for domestic use. Drawing upon its experience of consistently supporting Indonesian LNG projects since 1970s when the country was at the very first stage of LNG development, JBIC has encouraged the country to continue LNG exports to Japan through negotiations during the project examination process.

JBIC is committed to supporting Indonesia for mitigating its tight domestic gas supply, advancing economic development and increasing foreign currency earnings by employing its various financing instruments, while utilizing and further strengthening the ties it has cultivated with Indonesia, which is endowed with rich natural resources. At the same time, JBIC is seeking to secure a stable supply of energy resources to Japan and energy security in the Asian and Pacific region.

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