VZCZCXRO2018
PP RUEHFK RUEHKSO RUEHNAG RUEHNH
DE RUEHKO #1674 1700816
ZNR UUUUU ZZH
P 180816Z JUN 08
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC PRIORITY 5193
INFO RUEHBJ/AMEMBASSY BEIJING PRIORITY 3974
RUEHMO/AMEMBASSY MOSCOW PRIORITY 2375
RUEHFR/AMEMBASSY PARIS PRIORITY 6160
RUEHUL/AMEMBASSY SEOUL PRIORITY 9969
RUEHFK/AMCONSUL FUKUOKA PRIORITY 8439
RUEHNAG/AMCONSUL NAGOYA PRIORITY 6707
RUEHNH/AMCONSUL NAHA PRIORITY 0814
RUEHOK/AMCONSUL OSAKA KOBE PRIORITY 2162
RUEHKSO/AMCONSUL SAPPORO PRIORITY 9024
RHHJJPI/PACOM IDHS HONOLULU HI PRIORITY
RHMCSUU/DEPT OF ENERGY WASHINGTON DC PRIORITY
RUCNDT/USMISSION USUN NEW YORK PRIORITY 0387
RUEHBS/USEU BRUSSELS PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY

UNCLAS TOKYO 001674 
 
SENSITIVE 
SIPDIS 
 
USTR FOR CUTLER/BEEMAN 
FOR EAP/J AND EEB/IEC 
DOE/PI FOR DPUMPHREY, JNAKANA 
PACOM FOR D. VAUGN 
 
E.O. 12958: N/A 
TAGS: ENRG EPET PREL EFIN RS JA
SUBJECT: JBIC INKS LOAN FOR SAKHALIN 2 
 
REF: TOKYO 1552 
 
Sensitive but unclassified - not for internet distribution. 
 
¶1. (U) The Japan Bank for International Cooperation (JBIC) 
signed a loan agreement June 16 with the Sakhalin Energy 
Investment Company Ltd. to provide up to $3.7 billion in 
financing for the second phase of the Sakhalin 2 natural gas 
project according to a JBIC press release.  A syndicate of 
private sources will provide an additional $1.6 billion, 
bringing total financing for the project to $5.3 billion. 
 
¶2. (U) Sakhalin 2, in which Mitsui & Company Ltd, Mitsubishi 
Corporation, Shell Oil and Russia's state-owned Gazprom have 
equity shares, is expected to yield 9.6 million tons of 
liquid natural gas (LNG) annually.  More than 50% of this 
amount will be delivered to Japan, accounting for 8% of the 
country's total LNG imports.  In addition, according to the 
press release, Japan will receive a "substantial percentage" 
of the 150,000 barrels of crude oil per day pumped from the 
project.  The loan will be used to construct a marine 
platform, oil and gas pipelines and an LNG plant. 
 
¶3. (SBU) Comment. Japan imports nearly 80% of its energy 
needs and energy security is a long-standing and high-profile 
issue.  The JBIC financing of Sakhalin 2 is part of the 
long-term energy strategy the GOJ announced in 2006 to reduce 
Japan's overwhelming exposure to global energy markets by 
pursuing ownership of overseas projects.  Despite numerous 
delays, cost overruns and environmental challenges, Sakhalin 
2 will help Japan lock-in a steady supply of LNG and, to a 
lesser extent, crude oil. 
SCHIEFFER