Japan to finance Abu Dhabi's Hail offshore oilfield development

The Japanese government is leading the financing for Abu Dhabi’s Hail offshore oilfield development, which is now expected to start producing next year at the earliest.

The Japan Bank for International Cooperation (JBIC), the government’s main export finance bank, is providing US$378 million to Abu Dhabi Oil Company (Adoc), which is 64 per cent owned by an arm of Japanese refiner Cosmo Oil Company, with minority shareholders including Nippon Oil and Gas Exploration, Kansai Electric Power and Chubu Electric Power, the export bank said in a statement on Monday.

Adoc has one of the oldest concessions in Abu Dhabi, dating back to 1968 and has been developing the Mubarraz, Umm Al Anbar and Neewat Al Ghalan oilfields, offshore about 50 kilometres west of Abu Dhabi city.

In 2012 it acquired the Hail concession, which is nearly adjacent to Umm Al Anbar field to the south.

Mott MacDonald was awarded the first phase contract for Hail at the end of 2013, which included construction of an artificial island, a feature of offshore oilfield development in Abu Dhabi’s shallow waters.

Late last year, Spanish construction company Técnicas Reunidas won a $310m contract to bring the field to first production in 20 months, which would put the target for first oil at about May next year.

The field is expected to produce 20,000 barrels per day (bpd) at peak and contribute to Abu Dhabi’s overall target to boost production to 3.5 million bpd by the end of next year.

Abu Dhabi raised production to a record 3 million bpd last month, compared with about 2.7 million bpd when the expansion programme began the year before last.

As well as the JBIC loan, Mizuho Bank, The Bank of Tokyo-Mitsubishi UFJ and Sumitomo Mitsui Banking Corporation are lending a further amount to bring the total financing to US$630, about 75 per cent of the total estimated development cost of the field.

JBIC, in announcing the financing, said that resource-poor Japan’s energy policy is to finance projects by Japanese companies to secure energy sources. All of the oil from the Adoc-operated fields goes to Japan, which is the largest single buyer of Abu Dhabi oil, accounting for about one-third of its output on average.

The Hail oil will also be destined for Japan.

In January, JBIC signed a $2.1 billion facility agreement with Abu Dhabi National Oil Company, the fourth with the state-run oil and gas company, to secure long-term oil supply to Japan.

The facility is co-financed with Tokyo-Mitsubishi UFJ, Sumitomo Mitsui Banking Corporation, Mizuho Bank, Mitsubishi UFJ Trust and Banking Corporation, Citibank Japan, Sompo Japan Nipponkoa Insurance and Sumitomo Mitsui Trust Bank, bringing the overall total to $3.3bn.


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