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“The downstream
sector attracts us
through its
complexity”

DOWNSTREAM PROJECT MANAGEMENT

“The downstream
sector attracts us
through its
complexity”

Over the past 7 years, Herbert Smith Freehills has been involved in a large number of downstream projects in Russia and abroad. Globuc talked to Oxana Koerner, Senior Associate of the company about how the right legal team helps launch projects in due time and with minimal risks.

What is Herbert Smith Freehills (HSF) engaged in?

Our project's practice focuses on projects in the oil & gas and energy sectors and also covers project finance and dispute resolution.

Our firm has been operating in Russia for 20 years. Our Moscow team specializes in downstream sector work under Russian and English law, in both Russian and English, with minimal involvement of specialists from foreign offices.

Design and construction contracts created by our team are already been used by major Russian corporations, including on mega projects, and are considered as providing the maximum possible protection of the owners’ interests, therefore, allowing them to raise project finance. 

HSF has been taking part in downstream conferences held by Globuc for the past 7 years.  How do you explain such an interest in this sector?

At present, we are the only international law firm sponsoring Globuc annual conferences.  Starting from the first conference in 2013, we understood that this is an excellent opportunity to communicate with all market players and hear about the trends, prospects, and challenges in this sector.

Herbert Smith Freehills

Over the past 7 years, we have been involved in a large number of projects in Russia and abroad and at this conference, our goal is to share our experience and practices and explain, through using real-life examples, how the right legal team helps launch projects in due time and with minimal risks.

The downstream sector also attracts us through its complexity and constant commitment to efficiency, improvement, and innovation.  It is no secret that all mega projects in this sector are based on technology licenses. 

We specialize in working with the technology licensors and ensuring the projects get what they require when selecting technologies and entering into licenses, engineering and technical services agreements, catalysts and equipment supply contracts. 

As a result, we have a strong track record of successful negotiations with virtually all key licensors including Linde, Shell, Univation, Axens, UOP, Foster Wheeler, Grace, Lummus, ThyssenKrupp, Toyo, Saipem, KBR, Haldor Topsoe, and many others.

From a professional legal and technical perspective, the sector attracts us through complex negotiations on a variety of construction contracts such as – EPC, EPSS, EP+Cm, EPS, EPCM, PMC. 

Since language is no barrier for us, we successfully cooperate with the technical, financial, commercial and legal departments of project owners. 

As a result, our contracts reflect the specifics of each particular project.  There are many experienced contractors operating in the Russian market, and we are fortunate to have worked and conducted negotiations with practically all of them – Tecnimont, Technip, Linde, CPECC, SEG, CC7, JGC, MHI, Sinopec, Siemens, Samsung Engineering among others.     

This year you will be speaking about project finance.  It is not a secret that many companies hope to raise such finance for their projects.  What should be noted in this respect?

There is good reason to talk about project finance at present.  Over the past 5 years, the project finance market in Russia has grown substantially.  Centralized project finance support programs have been introduced, such as the Project Finance Factory from VEB.RF.  Russian projects attract foreign funds and cooperate with foreign export credit agencies and financial institutions.   

Almost every project we are servicing today is trying to achieve bankability.  For this purpose, the project shareholders from the very beginning invest in the preparation of commercial, technical and legal documentation in such a way that future project lenders can see an appropriate allocation of project risks, a clear contracting strategy, and transparent interface management.     

During our work on a number of projects, we have come across a number of presumptions and opinions as to what is required to achieve bankability.  Many of these are not quite correct.  This is why we would like to provide an explanation and share our views on what is actually required.

We will be focusing on several main misconceptions about project finance and provide our recommendations.

Our experience is of particular interest to the market as we have been working on raising finance for many large Russian projects and are aware of the requirements set by most of the financial institutions actively working in this sector.  They include export credit agencies - SACE, Euler Hermes, COFACE, China EXIM, CDB, JBIC, EXIAR, key Russian banks – VEB.RF, VTB, Gazprombank, Sberbank, large foreign banks – Banca Intesa, ING, ICBC, CCB, UniCredit, Credit Agricole and others.

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