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The charge for funding

Accessing energy sector cash from traditional sources has been difficult while oil and gas companies are cutting capital spending. But projects have been taking off

Heightened oil and gas price volatility has threatened the commercial viability of large-scale upstream projects over the past few years. Many traditional developments, which operators committed to at $100 oil, are now untenable with Brent prices at half that level.

But project finance in the renewables sector is thriving, driven by supportive government policies to decarbonise and generous subsidies. Wind and solar projects in particular are driving the charge. In the US alone, a number of major solar PV projects have been agreed, as traditional oil and gas companies seek to diversify operations. There has also been a rise in wind energy developments, with several large projects in western Europe expected to come online in 2019. The Beatrice Offshore Windfarm in Scotland will be one of the largest private infrastructure developments powering 460,000 homes, according to British utility provider SSE, one of the project's owners.

Government initiatives to encourage renewable energy sources have also paid off in developing countries, with Senegal, Uruguay, and Chile all pledging to build wind and solar plants. Seen as riskier bets in capital projects, developing nations often make use of export-credit agencies (ECAs), multilaterals and partnerships with national governments to gain access to international banks. In Indonesia, a large amount of credit and political risk has been mitigated by providing a public-private partnership (PPP) structure for Java's planned coal-fired plant, which will enable bid-winner PT Bhimasena Power Indonesia, a consortium of Japan's Electric Power Development Company, Itochu and Indonesian coal mining company Adaro Energy, to develop and operate the plant before transferring it to government hands.

Government policies, energy prices and new technology will all have an increasingly important influence on the project-finance sector. Oil and gas price volatility, US crude stockpiling, socio-political unrest in the Middle East and Opec's influence all affect the viability of bringing new oil and gas projects online. And companies are now beginning to question the timing of fossil fueled-energy projects sanctioned long ago.

However, a mismatch between supply and demand in emerging markets can still provide traditional energy project finance opportunities for investors with cash to spend. Booming population growth, particularly in developing Asia and Africa, is driving electricity demand growth.

Even in South Africa-the continent's most developed economy-electricity demand has surpassed state-owned power provider Eskom's ability to provide it. The possibility for future privatisation via PPPs or state sales could put additional investor cash to work. ECAs, multilateral banks and intergovernmental organisations could provide additional credit as well as public relations and financial expertise to project finance deals in emerging markets.

The UK, the US and Japan have also announced plans to kick-start sluggish economic growth by pouring tax dollars and rebates into upgrading roads, airports, and other infrastructure. Across the developed world, government departments have joined forces with the private sector. New York's LaGuardia's Central Terminal building heralded the first successful PPP in US aviation while the UK's $3.6bn Thames Tideway tunnel was conceived within a similar framework.

In western Europe, the rise in low carbon energy projects is accelerating, with offshore wind farms dominating the growth in the sector. While deal sizes in the renewables sector remain dwarfed by large- scale oil and gas projects, nearly 400 transactions have been completed in the past year amassing a cumulative value of around $155bn.

While growth in bringing new, large-scale oil and gas projects online has slowed, the outlook for the wind and solar sector looks rosier and signals that clean sources of energy can be used on a large-scale basis across the globe. Investor appetite for renewable-energy projects, wind in particular, is strong and will only increase.

Here, we've taken a snapshot of some of the leading banks and legal teams behind notable project-finance deals, using data provided by IJGlobal, from the beginning of October 2015 to the end of September 2016. The period is a historic one for energy markets as the industry tried to adapt to a new investment climate of lower oil prices. Here, you'll find some of the organisations building the future of global energy markets.


Sumitomo Mitsui Financial Group

Tokyo-based Sumitomo Mitsui Banking Corporation's (SMBC) project finance department covers all major industries but oil and gas is one of the team's core focus areas. SMBC's main commercial activity is lending capital. A third of its loan portfolio is for overseas projects while domestic borrowings comprise the remainder. In the financial year ending 31 March 2016, SMBC's foreign loan portfolio was around 3% higher than a year earlier. As one of the Japanese loan powerhouses, SMBC has completed a number of high-profile deals. In the Middle East the firm teamed up with other Japanese lenders; Mizuho, Mitsubishi UFJ Financial Group and ECA Japan Bank for International Cooperation, to complete a $630m term loan deal for the development of the Hail offshore oilfield in the UAE. In Russia, SMBC partnered with Mizuho again to complete a $900m term loan to finance Sakhalin Oil and Gas Development Company's Sakhalin-2 project. The development-owned by a consortium of Shell (27.5%), Gazprom (50%), Mitsui (12.5%) and Mitsubishi (10%)-produces oil and natural gas offshore near Russia's Sakhalin Island. Its facilities include three offshore platforms, an onshore processing facility, 1,600km of onshore pipelines and a liquefied natural gas plant. Working with a syndicate of international banks, SMBC was also appointed mandated lead arranger (MLA) on a triple tranche loan for Iberoamericana de Hidrocarburos (IHSA)-a partnership between Monclova Pirineos Gas and Grupo Cobra. The loan totaled around $720m and was used to develop the Nejo Gas development in Tamaulipas, Mexico.

ING Group

As one of the top 10 banks in the Europe, Middle East and Africa (EMEA) region, ING Group's project finance department is divided into four sections: oil and gas, metals and mining, offshore oil and gas and carbon and energy. The wider structured finance team brought in revenues of €1.46m ($1.54m) in 2015, according to its annual report-an 11% rise from the year before. After Petrobras nominated the Odebrecht Oil and Teekay Offshore Partners as the top commercial bidder on its Libra Floating Production, Storage and Offloading (FPSO) unit in 2014, the Odebrecht-Teekay joint venture hired ING Group. The company worked as part of a consortium of banks, hired to raise just over $1bn in a term loan, with a portion of the new debt used to repay a bridge loan of around $250m. It acted as MLA on the deal, leveraging $115m of their balance sheet in loans. The company was also hired as the MLA on Lukoil's second stage funding for development of the Shah Deniz gas field in Azerbaijan. The dual tranche deal was divided equally into $500m portions, with ING Group lending $125m. The Shah Deniz field, discovered in 1999, is one of the world's largest gas-condensate fields, with over 1 trillion cubic metres (cm) of gas in place, according to BP-the majority stakeholder. The field is located on the deepwater shelf of the Caspian Sea, 70km south-east of Baku. Funding for the second development stage of the project, named Shah Deniz Stage 2, is expected to add an additional 16bn cm per year of output to the existing 9bn cm/y.

Davis Polk & Wardwell

The firm was founded in 1849 and since then has expanded across most legal practices including corporate, international, litigation, trusts and industry. Davis Polk & Wardwell has a wealth of experience in oil and gas upstream financing, with specialist expertise across Central and South America. The company counts industry giants such as ExxonMobil, Pemex, and Repsol as clients and has advised on both oil and gas asset development as well as secondary projects. The firm advised on the Odebrecht Offshore Drilling Finance Limited deal as well as indirect project financing of Brazilian subsidiary Odebrecht Óleo e Gás.

Davis Polk & Wardwell also advised the sponsors on the issuance of new securities under similar terms of the existing notes, due in 2022. The deal, worth around $1bn, was comprised of new bonds, debt, and equity. The new securities helped finance deep-water drill ships and rigs, many of which are chartered to Petrobras. In 2014, when the bonds closed, the deal was the largest ever project bond issuance in Latin America.

White & Case

A stalwart of corporate law in the US for decades, White & Case had 22 project finance mandates under its belt between 2014-2015. With four partners located in New York, London, Miami and São Paulo the global team's expertise is well-positioned to carry out both sponsor and non-sponsor led transactions.

White & Case has a wealth of experience in most sectors of project finance and has completed deals in Saudi Arabia, the US, Peru, and the UAE. Alongside a syndicate of banks, the firm raised just over $8bn in financing for the Rabigh integrated refinery and petrochemicals complex. Odebrecht Offshore Drilling Finance Limited, the MLAs for the financing of the Libra FPSO, also hired White & Case. The firm advised the lenders on the total debt package, which was worth around $1bn. The proceeds went towards repaying a bridge loan and with the start of commercial operations due in 2017, the repayment of an existing term loan. The project, which will operate at depths of 2,400 metres under water, is expected to produce 50,000 barrels of oil a day and 4m cm/d of compressed gas.



At the start of 2011 state-run Sberbank of Russia announced it planned to buy private investment bank Troika Dialogue, creating the largest universal bank in the country. That same year, Sberbank became the first operator in the rouble bond market, taking a 22.4% market share. Today, the bank holds nearly a third of all Russian banking assets and has branched out into Europe, focusing on rouble-denominated deals. To add to Sberbank's accolades in the region, the bank announced its role as MLA on the Yamal LNG project. The funding totals €3.6bn, with Sberbank contributing €2.7bn of the total. The first stage of the project, expected to come online in 2017, is targeting production of 16.5m tonnes per year of LNG across three trains. The funds will be used for drilling wells, building a gas pipeline, treatment facilities and a liquefaction plant. The total deal value, estimated at around $16.3bn, is a multi-tranche transaction and includes financing in euros, rubles, and an ECA-covered loan denominated in dollars. Financial sanctions imposed on Russian entities holding western funds have handicapped some lenders.


Working alongside Russia's Sberbank, Gazprombank-which Gazprom founded and has a 35% share in-agreed to co-finance Novatek's Yamal LNG project. The two Russian lenders combined are contributing around $4bn to the project. Gazprom has had to seek financing from new lenders, such as Chinese banks, which are not subject to financial sanctions on Russian entities. This has caused delays to receiving some funding for upstream projects, threatening their viability. Despite the sanctions, the Bank of China has agreed to offer Gazprom a $2.17bn loan.

Latham & Watkins

In 2015 Latham & Watkins completed 16 project finance deals, acting as counsel for lenders on five, and sat sponsor-side for the remainder. The firm has extensive experience in LNG project finance deals including advising the sponsors on the Tangguh LNG expansion in Indonesia. In a complex deal, Latham & Watkins advised the consortium of more than 10 sponsors on how to raise a financing package worth $3.8bn across four tranches. Also on the sponsor side, the firm represented export agencies and international banks on the Yamal LNG project, with debt and equity tranches bringing the total financing amount to $30bn. In East Africa the firm has also worked on the sponsor-led deal to develop Mozambique's Offshore Area 1 in the Rovuma Basin, with US-based Anadarko and Italy's Eni as operators.

Clifford Chance

With a reputation as one of the top law firms for oil and gas and LNG project finance, Clifford Chance has extensive experience advising multinational corporations. The firm acted as legal advisor on the high-profile Yamal LNG expansion, helping to raise funds to drill new wells, expand pipelines and build a gas plant. Clifford Chance was also appointed legal advisor to the syndicate of international banks responsible for raising $316m for ICIL Maritime Leasing. The debt included a commercial loan, an ECA-backed tranche, and a bond offering. The cash was used to buy two LNG vessels. The bond, due in 2025, was secured by charterhire of the new vessels upon operation.



The origins of Bank of Tokyo-Mitsubishi UFJ (BTMU), date back to the 17th century and involved mergers with several companies including Tokai, Sanwa, Mitsubishi and Bank of Tokyo. In 1996, Bank of Tokyo merged with Mitsubishi to form Bank of Tokyo-Mitsubishi, and a decade later, merged with UFJ-the modern descendant of Tokai and Sanwa-to form BTMU.

Over the past decade BTMU has been the biggest project finance lender two years running, in 2014 and 2015, with loans totaling $16.1bn across 143 deals. In Trinidad and Tobago, BTMU closed the second largest deal ever completed in the country, with loans from BTMU entities totaling $0.99bn. The transaction included the creation of Caribbean Gas Chemical Ltd, with BTMU entities-Mitsubishi Gas Chemical Company and Mitsubishi Heavy Industries-alongside National Gas Company of Trinidad and Tobago and Massy Holdings.

The project, to develop a methanol and dimethyl ether plant in La Brea, is targeting commercial operation in 2019 with a production capacity of 1m tonnes of methanol and 20,000 tonnes of dimethyl ether per year.

BNP Paribas

French multinational bank BNP Paribas' earliest predecessors were discount banks established in 1848. In 2000, Banque Nationale de Paris took over Paribas in a stock war which culminated in the entity BNP Paribas one year later. Since then the firm has continually been within the top 10 project finance banks globally.

Green Plains, a US-based commodity business, which produces ethanol and corn-oil and handles and stores grain, announced the completion of a $225m senior secured credit facility. This is a secured loan which takes precedence over unsecured loans provided by the lender and is due for repayment in 2020. BNP Paribas worked on the deal, alongside BMO Capital Markets, acting as joint arrangers and bookrunners for the B+/B2 rated debt. The proceeds of the transaction included re-financing several debt facilities into a single structure and releasing trapped cash from several ethanol-producing facilities. BNP Paribas has also acted as joint lead arranger and bookrunner for South African energy firm Sasol's ethane cracker. Designed to produce 1.5m tonnes of ethylene per year, the cracker is expected to be operational in 2017. The project involved building an $8.9bn petrochemical complex, with a syndicate of 18 banks raising $4bn in credit facilities for the company.


Linklaters has a long and distinguished history among the London law elite, tracing its origins back to 1848. Since then the company has expanded worldwide, and has taken part in large, complex project finance deals in China, Uzbekistan, Saudi Arabia and Russia.

While many petrochemical project finance deals were dropping off in 2014-2015, Linklaters continued to work on multinational transactions. The firm represented the Development Bank of China in a multi-billion dollar deal related to a petrochemical plant in Kazakhstan.

The transaction involved $2bn of debt to finance the new chemical plant, producing 0.5m tonnes of polypropylene each year, and will be the first plant of its kind in the country. Linklaters also advised lenders on the €557m loan facility for the EuroChem Kingisepp Ammonia Plant in Russia. Financing the plant also involved Italy's ECA, SACE, to guarantee part of the debt facility. Once online, the plant will be one of five ammonia-urea facilities in Russia and will have a production capacity of 2,700 tonnes of ammonia per day.

Vinson & Elkins

Since US-based Vinson & Elkins was founded in 1917, the firm has developed focus areas in the energy and finance sectors. A landmark €350m deal, providing funding for two polymer units in the Sumgayit Industrial Park in Azerbaijan, signaled the historic development of the country's petrochemical industry, and state oil company Socar chose Vinson & Elkins for its counsel. The deal, a joint venture between Socar and major petrochemical players Pasha Holding, Azersun Holding and Gilan Holding, developed the country's first polypropylene plant. Alongside Linklaters, Vinson & Elkins also advised EuroChem on the development of the Kingisepp Ammonia Plant in Russia. Italy's SACE backed the full €0.557bn amount of non-recourse debt, allowing EuroChem to commission Italian construction company Maire Tecnimont to build the plant. The facility has a tenor of 13.5 years and benefits from 100% coverage of commercial and political risk.


Banco Santander

With a strong focus on both solar and wind power, Santander has worked with lenders including BTMU and French firm Natixis on the financing of six ground-mount solar PV parks in France with an installed capacity of 57.3 megawatts (MW). The project, valued at €203m, completed at the end of 2015 with Santander acting as both MLA and the insurance bank. It was also hired to act as MLA on the UK's first wind development to obtain financing under the contracts for difference scheme, where sponsors bid for state subsidies. Under the scheme, the UK enables developers to obtain a fixed strike price for electricity for 15 years. The package for Dudgeon Offshore Windfarm, a joint venture between Statoil, Masdar and Statkraft, will be used to construct a 402MW farm. Under the £1.5bn ($1.87bn) credit facility of various ticket sizes, Santander provided £75m. In 2016 Santander indirectly invested in wind and solar PV projects in Mexico through power purchase agreements totalling $700m. The projects, with combined, installed capacity of around 540MW are scheduled to be operational in 2018 and 2019.

Nord LB

In California Nord LB was hired by Recurrent Energy, a subsidiary of Canadian Solar, to act as MLA for the Mustang PV Solar Plant. The deal, worth $123m, closed as a term loan. Nord LB worked on it with Investec, ING Group and Western Alliance Bank. The money will be used to back leverage financing for the 100MW plant. Nord LB has also worked as MLA for Nextera Energy's Heartland I Windfarm, helping to refinance the 309MW facility. In Europe, it acted as the sole MLA on John Laing's Glencarbry Windfarm.

Norton Rose Fulbright

Norton Rose Fulbright, which closed six energy finance deals in 2015, has extensive experience dealing with both wind and solar projects. In Scotland the firm advised the syndicate of lenders on the financing for Beatrice Offshore Wind Farm. The $3.8bn in financing involved both debt, which comprised $1.9bn of the total, and equity. In addition to wind projects, it also advised the Moroccan Agency for Solar Energy on Phase II of its solar power complex. The firm advised project developer Sarreole on the US-backed Power Africa Initiative in Senegal, in building the country's first wind farm.

Watson Farley & Williams

The British firm advised sponsors on financing a term loan for the Khao Kor Windfarm in Thailand. It was provided by the MLA, Bangkok Bank, and raised a total of around $90m. The firm has also worked on the Corriegarth Wind Farm in Scotland. The deal value amounted to £100m through a non-recourse loan and a value added tax (VAT) facility. The proceeds of the transaction will go towards a 69MW wind farm, and will power around 33,000 homes. Watson Farley & Williams also advised borrower Tellenes Vindpark on the development of a 160MW wind farm in Norway.


Mizuho Bank

Mizuho Bank worked with a syndicate of international banks and sponsors, including Saudi Electricity Corporation, GDF Suez and Al Jomaih, to complete the $1.15bn, triple tranche deal to re-finance the Riyadh gas-fired PP11 power plant. Acting as MLA on the international tranche, Mizuho worked with Mitsubishi UFJ, SMBC, Standard Chartered, and Societe Generale to provide $0.507bn, with stepup pricing after seven and 12 years. Mizuho also acted as a global facility agent on the deal.

In Asia, the bank financed the first phase of a 300MW coal-fired power plant in the Philippines. The loan, worth $400m, was used to finance the construction of two 150MW plants. Mizuho, in cooperation with other international banks on the deal, acted as MLA.

Credit Agricole

Emerging from the agricultural industry in France, Credit Agricole was founded in 1894 through the cooperation of local elites, agronomists and farmers. Since then the French bank has evolved from its regional roots to become an international institution, taking part in project finance deals across North America, Europe and Latin America.

In the Middle East, the bank has worked with Acwa Power and the Saudi Electric Company to refinance the Rabigh IPP 1,204MW oil-fired power plant near Jeddah. The deal, valued at around $1.8bn, comprised multiple tranches and included Islamic financing. Credit Agricole, amongst the syndicate of other international banks, participated in a commercial floating rate loan, worth $129m. The bank has also been active in Latin America, helping sponsors Elecnor and APG to build transmission lines in Chile, between Charrua and Cabrero. The debt package included three facilities (a term loan, debt service reserve, and VAT facility) and a letter of credit worth $198m.

In the US, Credit Agricole provided funding through a letter of credit and a loan for Calpine Steamboat's refinancing of a gas-fired plant. The bank acted as MLA on the deal, helping to raise $550m in a term loan and $33m in credit.

Shearman & Sterling

US-based Shearman & Sterling has been practicing law since 1873. Since then the firm has advised many prominent clients including Dow Chemicals, Boston Red Sox owner Fenway Sports Ventures, and various governments.

The firm advised lenders on the $3bn Facility D water and gas-fired power plant in Qatar. The deal involved construction of a 2,520MW gas-fired power plant and a 136.5m gallon-per-day associated desalination plant near the Qatar Economic Zone, south of Doha.

In a PPP arrangement, Shearman & Sterling have also advised sponsors Bhimasena Power Indonesia on the development of a greenfield, coal-fired power plant in Central Java. The deal, worth $3.4bn of syndicated loans, was backed by a guarantee from both the Indonesia Infrastructure Guarantee Fund and from the country's Ministry of Finance. Once operational the plant is expected to produce 2,000MW of electricity. Shearman & Sterling has also been mandated to advise Sasol on the development and financing of the 175MW gas-fired Ressano Garcia power project in Mozambique.

Milbank, Tweed, Hadley & McCloy

Hadley & McCloy was founded in New York City in 1866, counting the Rockefeller and Vanderbilts families as clients. More recently, Milbank advised the African Development Bank (AfDB) on loan facilities for South Africa's beleaguered state-owned-enterprise Eskom. The deal, worth around $1.34bn will support Eskom's $17bn capital expenditure programme, increase reliability of the country's power grid and reduce load shedding. The deal marks a milestone in AfDB's New Deal on Energy for Africa programme-a strategy for providing universal access to energy by 2025.

Milbank, Tweed Hadley & McCloy has also represented the group of banks responsible for a $400m loan to SMC Global Power Holdings for the construction of two 150MW coal-fired power plants in the Phillipines. The loan has a tenor of seven years, and was priced at 325 basis points above the reference rate.



Led by Samuel Osgood, Citigroup's original purpose was to foster trade across borders. After the Second World War, the bank was involved with rebuilding the nation, and was part of key deals including the financing of Aristotle Onassis' revolutionary super tankers for oil transportation. Equally as important, the bank also issued letters of credit to assist firms under the Marshall Plan-a US initiative to give financial aid to struggling European economies. Citigroup also acted as MLA for Argentina's expansion of the Campana Refinery. The deal, funding an upgrade and expansion of the 87,000 barrel a day refinery near Buenos Aires, totaled $378m in debt. The lenders were various international banks and multilateral organisations. Citigroup worked alongside ICBC, Santander, BBVA, Credit Agricole and International Finance Corporation (IFC)-a World Bank group member. One loan from the IFC totaled $78m while the banks eached raised $60m. Axion Energy, the operator of the project, said it will increase crude processing capacity, catalytic tracking, diesel hydrotreating units and enhance overall operational flexibility.


Established by Thomas Sutherland, the Hong Kong Superintendent for the Peninsular and Oriental Steam Navigation Company, HSBC originally set out to expand trade and commerce in coastal regions. Since then the bank's growth has skyrocketed and its operations now span right across the globe. HSBC took part in the refinancing of the Jurong Island Oil Terminal in Singapore. The terminal, which is already operational, includes 15 jetties, nine barges, and two supertankers-or very large crude carriers (VLCCs). Distinct from other oil terminals, Jurong's key advantage is the ability to unload two VLCCs simultaneously. The terminal has a total storage capacity of 2.33m cm. HSBC worked with Bank of China, DBS, and Standard Chartered Bank on the sponsor-led refinancing deal for the terminal, raising SGD$1.75bn ($1.25bn) in the form of a term loan.

Sullivan & Cromwell

Sullivan & Cromwell (S&C) was founded in 1879, and has advised some of the largest companies in the US since. Notable deals include helping banker JP Morgan orchestrate the merger between Andrew Carnegie's Carnegie Steel Corporation, Elbert H. Gary's Federal Steel Company and William Henry "Judge" Moore's National Steel Company. In the oil and gas sector, S&C has been part of some of the world's largest projects. In early 2013, the firm represented borrower Caspian Pipeline Consortium in negotiating a $500m loan as part of a wider pipeline expansion project in the Caucasus region. The loan was part of a $5.4bn project, and is to be used as a stand-by source of funding if the project falls into deficit. S&C acted as counsel to the original project consortium for constructing the Baku-Tbilisi-Ceyhan oil pipeline, which runs from the Caspian Sea, across Georgia and Turkey to the Mediterranean Sea. The project had an original capital cost of $3.9bn, with construction completed in 2005. In 2015, S&C advised the project company and consortium again in a $1.63bn refinancing facility.

Chadbourne & Parke

Founded in 1902, Chadbourne & Parke is one of the largest project finance law firms in the world, and in 2015 alone it advised on $43bn worth of transactions. Recent deals in the oil and gas sector include financing for Indian conglomerate Reliance Industries' Jamnagar refinery. Chadbourne & Parke represented the consortium of international banks responsible for conceiving the project and for syndication of the $1.5bn loan. The loan, part of a $6.1bn total project cost, will be used to finance the setting up of a new refinery with an installed capacity of around 27 million tonnes (5.80m b/d) and a 0.9m tonne polypropylene complex.

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