The Japan Bank for International Cooperation (JBIC) has signed a loan agreement on a project finance basis with Brunei Methanol Company (BMC) of Brunei Darussalum. The loan totals US$360mn and is co-financed with the Bank of Tokyo-Mitsubishi UFJ, Mizuho Corporate Bank, Sumitomo Mitsui Banking Corporation and the Tokyo branch of Standard Chartered Bank.
The loan will finance the annual manufacturing of 850,000 tons of methanol in Sungai Liang Industrial Park.
This project is to be carried out by BMC, in which Mitsubishi Gas Chemical Company, Itochu Corporation and Brunei National Petroleum Company, have equity stakes. All the methanol manufactured will be sold to Mitsubishi Gas Chemical and then sold primarily to the Asian market, including Japan.
Demand for methanol as an alternative energy source to oil, is expected to increase in the near future. It will be used as an ingredient of bio diesel, an alternative to light oil, and dim-ethyl (ether DME), an alternative to LPG, as well as in fuel cells. Currently, Japan relies on imports for all its methanol demands. Brunei is one of the largest sources of imports of LNG for Japan, accounting for over ten per cent of its total LNG imports.
This is the first loan that JBIC has provided for such a downstream project led by the Brunei government and is expected to help cement ties between the two countries. These downstream projects show Brunei’s efforts to change its industrial composition, by fostering new domestic industries to create employment and economic diversification. This project is set to help Japanese firms secure a long-term stable methanol supply, so broadening energy sources in line with Japanese policy.
The MOU follows one signed previously by JBIC on October 30, 2006 with PetroleumBrunei.