Project Financing for High Voltage Direct Current Offshore Electricity Transmission Project in Abu Dhabi : Supporting Overseas Business Expansion of Japanese Company for High[...]

• Region: The Middle East
• Infrastructures
• Environment
• Overseas Investment Loans
• Project Finance

1. The Japan Bank for International Cooperation (JBIC; Governor: HAYASHI Nobumitsu) completed financial close on September 22 for the project financing^*1 of approximately USD1,201 million (JBIC share) with ABU DHABI OFFSHORE POWER TRANSMISSION COMPANY LIMITED L.L.C., a United Arab Emirates (UAE) incorporated company, invested in by Kyushu Electric Power Company and other companies, for a high voltage direct current offshore electricity transmission project. The loan is co-financed with the Export-Import Bank of Korea, Mizuho Bank, Ltd., Sumitomo Mitsui Banking Corporation, BNP Paribas Fortis, and Standard Chartered Bank, bringing the total financing amount to approximately USD3,201 million.
   
2. This project involves the construction, ownership, and operation of a high voltage direct current offshore power transmission system linking two offshore production facilities owned by the Abu Dhabi National Oil Company (ADNOC), the national oil company, wholly owned by the Emirate of Abu Dhabi (Abu Dhabi), with the Abu Dhabi onshore power grid. The project will receive payment of power transmission charges from ADNOC for 35 years after the construction has been completed. In November 2021, ADNOC and JBIC signed a memorandum of understanding (MoU) on business cooperation^*2 to promote cooperation between ADNOC and Japanese companies in the fields of decarbonization and energy transmission, as well as energy efficiency, and the project is in line with the objectives of this MoU.
   
3. In the "Net Zero by 2050 Strategic Initiative" announced in October 2021, the UAE Government committed to reducing CO2 emissions to zero by 2050, a first among the oil-producing countries in the Persian Gulf. This project is in line with these policies as it contributes toward reducing the emission of greenhouse gases in Abu Dhabi by supplying clean power generated more efficiently on the UAE mainland to ADNOC's offshore production facilities.
   
4. In the Sixth Strategic Energy Plan released in October 2021, the Government of Japan stated that in the midst of the global move for decarbonization, it is important for Japan to improve the international competitiveness of its industry through support for the development and social implementation of decarbonization technologies by Japanese corporations. Also, in the Infrastructure System Overseas Promotion Strategy 2025 approved by the Management Council for Infrastructure Strategy in December 2020, the Government of Japan established the policy of providing support for the transition to carbon neutrality and decarbonization through constructive involvement in host country policies toward energy transition and decarbonization, along with the provision of financial support for quality energy and electricity infrastructure that harnesses sophisticated technologies to reduce burden on the environment in a way that is compatible with the energy policy of the said country. The loan is in line with these policies and will financially support the overseas infrastructure project, where the Japanese company has invested and will be involved in its operation and management for the long term, thereby contributing toward maintaining and improving the international competitiveness of Japanese industry.
   
5. As Japan's policy-based financial institution, JBIC will continue to provide financial support to assist Japanese companies in the overseas expansion of their infrastructure businesses toward decarbonization by drawing on its various financial facilities and schemes for structuring projects and by performing its risk-assuming function.
   

Note

1. *1
   Project finance is a financing scheme in which repayments for a loan are made solely from the cash flow generated by the project.
2. *2
   See Press Release on November 18, 2021.