Inpex Corp. signed $20 billion of loans for its Ichthys project in Australia, helping to complete financing for a liquid natural gas venture which has contracts to supply the fuel to power producers from Japan to Taiwan.
The Japan Bank for International Cooperation, one of eight export credit agencies providing funds, is the deal’s biggest lender at $5 billion, Masahiro Murayama, Inpex’s director overseeing finance and accounting said at a press conference in Tokyo today. Mizuho Corporate Bank Ltd., Sumitomo Mitsui Banking Corp. and Bank of Tokyo-Mitsubishi UFJ Ltd. are among the 24 commercial banks participating, Murayama said.
Inpex, Japan’s biggest energy explorer, and French partner Total SA approved the $34 billion Ichthys project in January and expect to start production by the end of 2016. The venture, with reserves equivalent to LNG production of 8.4 million metric tons a year for about 20 years, is among some $210 billion of such projects proposed or under construction in Australia to meet rising Asian demand for the less-polluting fuel.
Inpex, 18.9 percent owned by Japan’s trade ministry, raised $6.6 billion in 2010 via a share sale in part to help fund the project. That money is among internal reserves which will pay for about 40 percent of the project, with the rest coming from the loans announced today, Murayama said.
“We now have a very clear idea of how we fund the project,” Murayama said. “We don’t need to borrow any more.”
The loans are the biggest ever so-called project finance facility arranged in the international financial market, Inpex said in a statement. Project financing is a method of funding whereby debt repayments are sourced primarily from the forecast cash flows of a project and security is limited to the project’s assets.
Tokyo Gas Co. signed a $235 million syndicated loan to buy its 1.575 percent stake in the project, JBIC said on its website today. Osaka Gas Co., Chubu Electric Power Co. and Toho Gas Co. hold smaller stakes in the venture, which is 66.07 percent owned by Inpex group companies and 30 percent by Total.
Tokyo Electric Power Co., Kansai Electric Power Co. and Taipei-based CPC Corp. are also contracted to buy gas from the project, located in western Australia.
Inpex signed a $300 million term loan in August and doesn’t have any outstanding bonds, according to data compiled by Bloomberg.