Financing from JBIC, commercial lenders geared to keeping concessions

HIDEMITSU KIBE, Nikkei staff writer

DUBAI, United Arab Emirates — Japanese state-run and commercial banks will furnish Abu Dhabi National Oil Co. with a $3 billion loan in hopes of renewing offshore oil concessions that expire in March.

The Japan Bank for International Cooperation will shoulder roughly $2.1 billion of the total. Partners in the loan include megabanks Sumitomo Mitsui Banking Corp. and Mizuho Bank, of Sumitomo Mitsui Financial Group and Mizuho Financial Group respectively, as well as British lender HSBC.

ADNOC, which is fully owned by the Emirate of Abu Dhabi, has exported oil to Japan for decades. The JBIC has previously arranged four loans of comparable size to the company.

Last year, the JBIC and ADNOC agreed to deepen their cooperation. The government of Abu Dhabi is working to diversify its industries in order to spur job creation, and is advancing into downstream oil operations as part of that effort. As a result, large investments are seen ahead in fields such as information technology, and demand for funding is growing.

Japan’s government aims to source at least 40% of all its oil and natural gas, domestically produced or imported, from domestic businesses’ interests by 2030. Abu Dhabi is a linchpin of Japan’s energy strategy, not least because about 40% of the oil fields the Japanese independently develop are concentrated there. Seeking to preserve its concessions, Japan has arranged a swath of cooperative measures with the emirate, such as for energy technology and supporting small- and midsize businesses.

Even as factors such as a growing shift toward electric vehicles in Europe and elsewhere drive predictions that oil demand could peak as early as the 2020s, competition for oil field rights remains stiff. Oil majors including Britain’s BP, as well as Chinese players, are still scrambling for concessions in the Middle East.