INTERVIEW

Project Financing for FPSO Vessel Chartering
Services Provided to an Oﬀshore Oil Fieldin Brazil
Supporting Japanese Companies in Building an
Ultra-Deep FPSO and Providing Operations Services
Interview with Director Chie Wakatsuki and Deputy Director Masaki Takami
Unit 1, Marine and Aerospace Finance Department, Industry Finance GroupJBIC signed, in March 2018, a loan agreement in projectﬁnancing with Sepia MV30 B.V. (SEPMV30), a Dutch
company incorporated by MODEC, Inc. (MODEC), Mitsui &Co., Ltd., Mitsui O.S.K. Lines, Ltd., Marubeni Corporationand Mitsui Engineering & Shipbuilding Co., Ltd.
The loan will ﬁnance long-term ultra-deepwater
FPSO*1 vessel chartering services (leasing, operations,maintenance, etc.) to be provided by SEPMV30 to Petróleo
Brasileiro S.A. (Petrobras), a state-owned oil company inBrazil, for developing an oil ﬁeld located oﬀ the coast of thecountry. The loan is co-ﬁnanced with seven Japanese andforeign private-sector banks.

An FPSO System for Use in the Developmentof Ultra-Deepwater Oil and Gas Fields

Director Chie Wakatsuki

Deputy Director Masaki Takami

Project Finance for
Ultra-deepwater FPSO Vessel
Chartering Services to a
Brazilian Offshore Oil Field
JBIC signed, in March 2018, a loan
agreement amounting up to about
USD492 million (JBIC portion) withDutch company Sepia MV30 B.V.
(SEPMV30), incorporated by MODEC,
Inc., Mitsui & Co., Ltd., Mitsui O.S.K.
Lines, Ltd., Marubeni Corporationand Mitsui Engineerng &Shipbuilding Co., Ltd.
The loan, made as projectﬁnance, will ﬁnance 21-year
long-term FPSO vessel chartering
services to be provided by SEPMV30
to Petróleo Brasileiro S.A. (Petrobras),a state-owned oil company in Brazil,for developing the Sepia oil ﬁeld
located oﬀ the coast of Brazil inwhich Petrobras holds an interest.
The loan is co-ﬁnanced by Sumitomo
Mitsui Banking Corporation, ING
Bank N.V., Société Générale, Mizuho
Bank Ltd., Overseas Chinese Banking
Corporation Limited, MUFG Bank,Ltd., and ABN AMRO Bank N.V. The
total co-ﬁnancing amount is about
USD987 million.

In recent years, oﬀshore oil and gas ﬁelds have beendeveloped worldwide. Since 2000, exploration at a depth
exceeding 1,000 meters has expanded, and Petrobras hasbeen focusing on development for deepwater oﬀshore
reservoirs oﬀ the coast of Brazil. JBIC is supporting thedevelopment of an oil ﬁeld located some 250 kilometersoﬀ the coast of the state of Rio de Janeiro at the depth ofapproximately 2,200 meters in the pre-salt layer that lies
about 5,000 meters under the seabed.
MODEC is Japanʼs only company providing EPCI aswell as O&M*2 for FPSOs. Its strength lies inultra-deepwater FPSOs that are achieving top
performance in the industry. In this project, MODEC willbuild an FPSO unit with the capacity to produce up to 180
thousand barrels of crude oil per day and 212 million
cubic feet of gas per day, and store 1.4 million barrels ofcrude oil. SEPMV30 will provide FPSO vessel chartering
services to Petrobras for 21 years.
Director Chie Wakatsuki explains the outline of theproject: “MODEC sees Brazil as an important market for theFPSO business. This project is the 10th FPSO vesselchartering service to be provided to Petrobras by MODEC.
JBIC has provided ﬁnance for all of them but one.
In the past few years, crude oil prices have dropped,
partly reﬂecting increased supply of shale gas produced inNorth America. Consequently, the number of new FPSO
projects has sharply decreased as deepwater oﬀshore oiland gas extraction lost steam due to high drilling costs.
For MODEC, this project is the ﬁrst successful businessagreement in three years.”

A Long-awaited Large-scale FPSO Finance
Project Undertaken by Japanese Companies
JBIC received a request for ﬁnancing by MODEC in March2017 when it submitted the bid. It formally started
deliberations in October of the same year when MODEC
was awarded the contract.
Deputy director Masaki Takami looks back: “At thattime, the media reported alleged corruption involving aformer president of Petrobras. Petrobras is a charterer forthis project. We had to clear a number of obstacles thatwere diﬀerent from the past eight cases that MODEC
engaged with Petrobras. In addition, Petrobrasʼ external
credit ratings were downgraded, reﬂecting the countryʼssluggish economy and decline in crude prices. A serious
compliance problem emerged and this also negatively
aﬀected the companyʼs creditworthiness. Hence, I visited
Brazil to meet the companyʼs oﬃcials and look into its
ﬁnancial condition and the state of corporate
governance in detail. I also interviewed various persons
at government agencies, ﬁnancial institutions and rating
agencies etc. to hear their opinions.”“As a result, I managed to obtain consent from all of

Courtesy: MODEC※An FPSO vessel of the same type used in the project.

those who were involved to move forward with the project.
Nevertheless, I experienced some diﬃculty in trying toinclude anti-bribery clauses etc. in the agreement throughconsultations with the sponsors and co-ﬁnancing banks.
There were times when I was not sure whether we could
put the project through by the deadline. I was relieved that
we could successfully ﬁnalize the ﬁnancing arrangements
for a long-awaited large-scale contract awarded to aJapanese company.”
The building of the FPSO vessel is already under way,
and it is slated to be delivered to Petrobras in 2021.

Expanded Deployment of Ultra-Deep FPSOs
at Sea off West African Coast
Chie Wakatsuki points out the signiﬁcance of the role played
by JBIC in the FPSO project and its future outlook as follows:“Price competition has intensiﬁed in the sector of FPSOs
designed for operations in oﬀshore oil and gas ﬁelds locatedin relatively shallow waters. As the scope of oﬀshore
exploration is expanding to ultra-deepwater reservoirs, thedemand for FPSOs for such operations is expected to grow.
Drawing on its proven track record and technologicalstrengths, MODEC is pursuing its strategy to place greater
emphasis on ultra-deep FPSOs.”“As part of its Investments for the Growth Strategy 2017,
the Japanese government will advance public-private
cooperation for development and commercialization
concerning methane hydrate deposits expected to exist inwaters around Japan. Against such a backdrop, I believe thisproject will speed up the advance of technology and know-how
in FPSO operations required for exploiting ocean resources.”
Looking toward the future, Masaki Takami sums up: “As apublic-sector ﬁnancial institution, JBIC can ﬁnancially support
Japanese companies in their eﬀorts to contribute to Petrobras
and other oil and gas companies as well as the developmentof oﬀshore oil and gas ﬁelds undertaken around the world.”*1 FPSO: Floating production, storage, and oﬄoading system. It is aﬂoating vessel for the ﬁrst stage of processing crude oil produced atoil wells, which separates associated gas and water, and for thestorage and oﬄoading of oil.

*2 EPCI/O&M: Engineering, procurement, construction andinstallation/operation and maintenance