State-run oil company Abu Dhabi National Oil Company (ADNOC) has inked a facility agreement worth USD 3.3 billion with the Japanese banks aimed at securing stable oil imports by Japanese companies.
The facility is mostly financed by Japan Bank for International Cooperation in the amount of USD 2.1 billion and cofinanced with the Bank of Tokyo-Mitsubishi UFJ, Sumitomo Mitsui Banking Corporation, Mizuho Bank, Mitsubishi UFJ Trust and Banking Corporation, Citibank Japan, Sompo Japan Nipponkoa Insurance, and Sumitomo Mitsui Trust Bank.
The UAE is believed to be vital to Japan’s resource strategy as it has been a stable source of crude oil for more than 30 years, and because the UAE allows entry of foreign oil companies to operate on the basis of concession agreements.
JBIC has signed with ADNOC a succession of memoranda of understandings (MOUs) in the oil and gas sector, as well as in the environment sector, and, in November 2015, signed a MOU aimed at further strengthening the strategic partnership between Japan and ADNOC. This MOU allows both parties to mutually recognize the significance of granting new concessions and renewing existing concessions involving Japanese oil development companies.
This is particularly important as approximately 60% of the Abu Dhabi oil field concessions owned by Japanese companies are currently scheduled to expire in 2018.
“Under such circumstances, the objective of this facility is to give indirect support towards the renewal of such offshore oil field concessions, on the basis of the above MOU signed in November 2015. The facility will thereby contribute to strengthening Japan’s relationship with ADNOC, as well as with the UAE, which is important in terms of Japan’s resource strategy, while contributing to securing a stable supply of energy resources to Japan,” JBIC explained.
This is the fourth facility provided to ADNOC with the aim of securing a long-term oil supply for Japan.