Japan Bank for International Cooperation (JBIC) has signed a loan agreement totalling up to US$649mn with Inpex North Caspian Sea, in which Inpex Corporation has an equity stake. The loan was cofinanced with private financial institutions Mizuho Corporate Bank (agent bank), Bank of Tokyo-Mitsubishi and Sumitomo Mitsui Banking Corporation (SMBC).
This loan will finance the development of the Kashagan offshore oilfield in the Kazakh-controlled area of the North Caspian Sea. The oilfield is being developed by an international consortium formed by seven companies in six countries, including the Company and Eni in Italy.
The Kashagan oilfield has huge oil reserves and is reportedly the largest oilfield discovered in the world in the past 30 years. Since acquiring a participatory interest in the North Caspian Sea Block in September 1998, the company has participated in developing the oilfield as a member of the international consortium.
Oil production will begin in 2008, and after phased development its output is eventually expected to reach a peak volume of 1.2mn barrels a day. The consortium is considering transporting crude oil produced in this oilfield through the Baku-Tbilisi-Ceyhan (BTC) pipeline (which is being constructed with the participation of Japanese companies), in addition to the existing oil transport network. The company is aiming to import to Japan a volume of crude oil proportionate to its share of the interest (8.33%) through swaps.
The Caspian Sea embraces large-scale oilfields including the Kashagan and Azeri-Chirag-Gunashli (ACG) oilfields. As the BTC pipeline, which will enable Caspian oil to be transported to the Mediterranean, is coming close to completion, these oilfields are attracting global attention.
JBIC has supported the BTC pipeline construction and ACG oilfield development projects by providing loans totaling approximately US$2bn to date. Following these previous loans, the new loan will serve to diversify energy supply sources for Japan, which is heavily dependent on the Middle East for its oil, as part of JBIC’s multi-faceted support for energy resource development in the region.