The Japan Bank for International Cooperation (JBIC) has signed a loan agreement totalling US$649mn with Inpex North Caspian Sea. The loan was co-financed with private financial institutions.
The loan will finance the development of the Kashagan offshore oilfield in the Kazakhstan-controlled area of the North Caspian Sea. The oilfield is being developed by an international consortium formed by seven companies in six countries.
The Kashagan oilfield has huge oil reserves and is reportedly the largest oilfield discovered in the world in the past 30 years. Oil production will begin in 2008 and after phased development its output is expected to reach a peak volume of 1.2mn barrels a day. The consortium is considering transporting the crude oil produced in this oilfield through the Baku-Tbilsi-Ceyhan (BTC) pipeline, in addition to the existing oil transport network.
The Caspian Sea embraces large-scale oilfields including the Kashagan and Azeri-Chirag-Gunashli (ACG) oilfields.
With the construction of the BTC pipeline, which will enable Caspian oil to be transported to the Mediterranean, these oilfields are attracting global attention.
JBIC has supported the BTC pipeline construction and the ACG oilfield development projects by providing loans of approximately US$2bn to date.
The loans and projects serve to diversify energy supply sources for Japan, which is heavily dependent on the Middle East for its oil.