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Japan Bank for International Cooperation (JBIC) has signed a loan agreement for US$900mn for a refinery modernisation project with Companhia de Desenvolvimento e Modernizao de Plantas Indstriais (CDMPI), a Brazilian corporation, in which Mitsui & Co and Itochu have equity stakes. 

The loan was cofinanced with Sumitomo Mitsui Banking Corporation (agent bank) and the other six private financial institutions.

The project is aimed at strengthening the capacity of a refinery, upgrading product quality, and alleviating environmental impacts by modernising the Henrique Lage Refinery (Revap), the third largest refinery in Brazil owned by Petrobras, the Brazilian international energy company. 

The loan will finance installation of the oil refinery and other facilities that CDMPI will lease to Petrobras. 

Crude oil production volume has been increasing in Brazil and Brazil has achieved the national goal of crude oil self-sufficiency in April, 2006. 

However, the refining capacity of heavy oil, which makes up major part of domestically produced crude oil, remains inadequate mainly due to the aging refinery facilities in the country. 

Modernisation of refinery facilities is thus one of the top priority subjects in the government’s energy policy and the newly signed loan is expected to contribute to energy policy by enhancing Brazil’s oil refinery capacity. 

The two Japanese trading houses, which seek to expand business activities in the energy and natural resources sectors, consider participation in this project to be a significant opportunity conducive to further involvement in Petrobras-related projects, including oil, natural gas and other resource development projects. 

Thus the financing JBIC has provided also supports Japanese firms’ overseas business activities.

Endowed with rich energy and agricultural resources, Brazil is drawing attention as a market backed by the largest economy in Latin America.

Japanese firms are increasing business activities there primarily in the energy and natural resources sectors. The Joint Program for Revitalization of Economic Relations between Japan and the Federative Republic of Brazil, launched following the summit meeting of President Lula and Prime Minister Koizumi in May 2005, advocates the promotion of trade and investment, as well as enhancement of cooperation in the energy and natural resources sectors between the two countries.