Japan's Nexi backs Brazilian FPSO

OREANDA-NEWS. Japan's state-affiliated export insurance agency Nexi is providing insurance for a \\$400mn loan to build a floating, production, storage and offloading (FPSO) vessel under a long-term charter agreement with a Brazilian consortium led by state-owned oil firm Petrobras.

Beta Lula Central, a joint venture set up between Japanese trading house Mitsubishi, Japanese shipping firm NYK Line, Netherlands-based SBM Offshore and Brazil's QGOG, is raising project financing totalling \\$1.55bn for the FPSO construction. The vessel is being built at a subsidiary of SBM Offshore for a January 2016 commissioning and will have a capacity to produce 150,000 b/d of crude, 6mn m?/d of natural gas and store about 1.6mn bl of crude.

Beta has agreed on a 20-year FPSO charter agreement with the BM-S-11 consortium to develop the Lula Central oil field in the pre-salt layer about 5,000m under the seabed, about 250km south of Sao Paulo. The pre-salt BM-S-11 concession is 65pc owned by Petrobras and the rest by UK-listed BG and Portugal's Petrogal.

Nexi will underwrite insurance for a \\$400mn loan provided by Japan-based commercial banks led by Mizuho Bank, Bank of Tokyo-Mitsubishi UFJ and Sumitomo Mitsui Banking. The insurance will cover up to 90pc of losses from political risks and 95pc from commercial risks.

Japan has been backing offshore resource development infrastructure ventures by Japanese companies via state-backed financial institutions such as development bank JBIC and Nexi. Mitsubishi and NYK Line are among the Japanese firms involved in such offshore projects, especially in Brazil. But they are considering FPSO ventures elsewhere, such as the US Gulf of Mexico, as deepwater resource development off Brazil has stalled on the back of a corruption scandal engulfing Petrobras, along with weaker oil prices.