News emerged on Monday of a complex little deal for a $3bn “loan” from the Japan Bank for International Co-operation, the government’s main overseas lender, to Abu Dhabi National Oil Co (Adnoc) of the United Arab Emirates.
The interesting aspects include the fact that JBIC has raised at least a third of the financing from commercial Japanese banks – one of the key ones being Mizuho Financial Group.
Another feature is that the deal is effectively advance payment by Japan for crude oil supplies to Japanese oil firms. The “loan” will be repaid by Adnoc from the proceeds of the crude oil sales to Japanese companies such as Cosmo Oil, says Reuters.
The reasons for the deal are clear, as Bloomberg notes, after crude prices reached record levels last month amid higher demand and growing competition from China and India for energy reserves. The UAE is Japan’s biggest oil supplier after Saudi Arabia and the fourth-biggest producer in OPEC, which pumps about 40 per cent of the world’s oil. Oil purchases from the UAE seemingly accounted for about 25 per cent of Japan’s total imports in 2006.
The deal, to be signed by Adnoc and JBIC early this week, comes after JBIC signed a strategic partnership with state-run Adnoc earlier this year as a key part of Japan’s push to deepen bilateral ties in the oil and gas sector and secure long-term crude oil supply deals for Japanese oil firms.
“With the UAE’s oil structured into the loan, crude supplies to Japan are more assured,” Hidetoshi Shioda, a senior energy analyst at Mizuho Securities told Bloomberg. “It also benefits the UAE, as Japan will take a steady supply for a longer period of time.”