Project Financing for Methanol and Dimethyl Ether Production Plant in the Republic of Trinidad and Tobago
12:43 14 September in News
Contributing to Strengthening Relationships with Resource-rich Countries and Securing Energy Resources for Japan
September 3, 2015
The Japan Bank for International Cooperation (JBIC; Governor, CEO: Hiroshi Watanabe) signed a loan agreement on September 2, in project financing*1, totaling up to USD485.1 million (JBIC portion) with Caribbean Gas Chemical Limited (CGCL), a company in the Republic of Trinidad and Tobago (Trinidad and Tobago). This loan is JBIC’s first project financing provided to a project in Trinidad and Tobago and is cofinanced with The Bank of Tokyo-Mitsubishi UFJ, Ltd., bringing the overall cofinancing amount to USD693 million.
CGCL is a joint venture established by Mitsubishi Gas Chemical Company, Inc. (MGC), Mitsubishi Corporation (MC) and Mitsubishi Heavy Industries, Ltd. with Trinidad and Tobago’s state-owned company The National Gas Company of Trinidad and Tobago Limited and Massy Holdings Limited. In this project, CGCL plans to produce one million tons of methanol per annum, as well as dimethyl ether (DME)*2 using part of the methanol produced at the Union Industrial Estate in the La Brea area in southern Trinidad. MGC and MC will off-take the majority of the methanol produced and sell it to various countries including Japan.
Methanol is mainly produced from natural gas and is used as a raw material in a wide range of chemical products such as adhesive agents and synthetic resins, in addition to being used as a raw material for DME, gasoline additives and fuel for fuel cells. It is important for Japan to diversify its methanol importation sources to reduce its procurement risk, as Japan depends entirely on imported methanol. This project will lead to the expansion and diversification of overseas methanol production bases invested in by Japanese companies, and it is thereby expected to contribute to securing resources and the stable supply of energy resources to Japan.
The government of Trinidad and Tobago plans to promote downstream businesses, including methanol and DME, in order to diversify the use of natural gas. This project is consistent with such policy and will contribute to strengthening Japan’s relations with Trinidad and Tobago, which is one of the leading natural gas producers in the Atlantic region.
As Japan’s policy-based financial institution, JBIC will continue to financially support projects that contribute to securing important energy resources for Japan, by drawing on its various financial facilities and programs for structuring projects, and performing its risk-assuming function.
- *1 Project finance is a financing program whereby the repayment of a loan extended to a project relies solely on cash flows generated by the operation of the project, with collateral limited to project goods and other assets.
- *2 Dimethyl ether can be used as a substitute for LPG or as a substitute for diesel in automobiles or in power generation, and has therefore been receiving a lot of attention as a next-generation source of clean energy.