Cuu Long Joint Venture Company (CLJOC) chartered a floating production storage and offloading unit (FPSO) from a joint venture project company owned by Modec Inc. and Mitsui & Co. (MM Joint Venture). CLJOC’s partners are PetroVietnam, ConocoPhillips, KNOC and SK of South Korea and France’s Geopetrol. The consortium has a contract to explore, develop and exploit oil and gas reserves at the Block 15-1 Su Tu Den of Vietnam. ConocoPhillips operates this block for CLJOC.
The MM Joint Venture obtained loans from Japan Bank for International Cooperation and commercial banks. The loans are structured as limited recourse. Repayment is based on the FPSO’s cashflow, the major source of which are CLJOC’s charter payments.
The commercial loan portion is insured by Nippon Export and Investment Insurance, providing cover against political risks. The financing has been reported as the first limited recourse transaction for an FPSO in Asia.
Team: Steve Krebs and Matt Archer, of Houston, represented ConocoPhillips in the negotiation of the charter and undertakings required by the lenders of ConocoPhillips and CLJOC.