Japan, Korea Banks to Finance LNG Project in Indonesia

Banks in Japan and South Korea, the world’s biggest importers of liquefied natural gas, are set to lend $1.5 billion to Mitsubishi Corp.’s project to produce the fuel in Indonesia, people familiar with the matter said.

Sumitomo Mitsui Financial Group Inc. is leading the group of lenders, they said, asking not to be identified because the details are private. State-owned Japan Bank for International Cooperation will commit $764 million. Mitsubishi UFJ Financial Group Inc., Mizuho Financial Group Inc. and Sumitomo Mitsui will provide a total of $382 million, while Export-Import Bank of Korea, Korea Exchange Bank and Nonghyup Bank together are committing the same amount, according to the people.

Mitsubishi owns 45 percent, the largest stake, in the Donggi-Senoro LNG project on the central island of Sulawesi in Indonesia. Japan is the world’s biggest importer of the liquefied fuel as it seeks other energy sources following the earthquake and Fukushima nuclear disaster in 2011. South Korea relies on the imports, which are transported in tankers, as its only land border is with North Korea and it has no international oil or natural gas pipelines.

Mitsubishi will secure the project finance soon, said Yukio Shinano, a spokesman for the company, while declining to provide any further details.

The facilities in Sulawesi are scheduled to begin operations in the middle of next year, and will have annual capacity of 2 million tons, the people said.

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