Allen & Overy has advised on the financing for the USD2.8 billion Donggi-Senoro Liquefied Natural Gas (DSLNG) project which was signed today.
Donggi-Senoro LNG is the fourth liquefied natural gas (LNG) project in Indonesia and is scheduled to start production in mid-2015. The liquefaction plant will have the capacity to produce 2 million tons of LNG per year. The Republic of Indonesia has the largest economy in Southeast Asia and is the world’s fourth-largest exporter of LNG. DSLNG is the first LNG project in Indonesia to adopt a downstream development model, enabling separate development of upstream (natural gas and condensates production) and downstream (LNG and condensates) businesses. The Donggi-Senoro LNG project is only the world’s second non-integrated merchant LNG plant. Allen & Overy advised the project company, PT Donggi Senoro LNG, a subsidiary of the sponsors, Mitsubishi Corporation, PT Pertamina (Persero), Korea Gas Corporation (KOGAS) and PT Medco Energi Internasional TBK.
Commenting, Allen & Overy Tokyo-based partner Scott Neilson said: “The Donggi-Senoro LNG project is the first true project financing in the LNG sector in Indonesia and is a tribute to a great group of sponsors. The innovative legal separation between the upstream and downstream LNG plant, and the financing of the LNG plant project itself rather than through a trustee borrowing scheme as traditionally seen in the LNG sector in Indonesia, is an achievement for all involved. We are proud to have been involved in helping the project reach this stage through a combination of our market leading global LNG practice with the leading projects and financing practice in Indonesia of Ginting & Reksodiputro.”
Allen & Overy Sydney-based partner Adam Stapledon added: “We are delighted to have been involved in the successful signing of the Donggi-Senoro LNG project financing. This follows our work on other high-profile transactions, such as the USD9 billion Nghi Son Refinery and Petrochemical Project, the largest project financing in Vietnam to date, and the Roy Hill iron ore project in Australia, the largest project financing to date in the mining sector, this is another great example of the value to our clients of our international resources and sector expertise when it comes to structuring and executing innovative, complex and first in the market transactions.”
The export credit agencies involved in the financing are The Japan Bank for International Cooperation (JBIC), The Export Import Bank of Korea (KEXIM) and Nippon Export and Investment Insurance (NEXI). The commercial banks involved with the benefit of NEXI insurance are Sumitomo Mitsui Banking Corporation (SMBC), The Bank of Tokyo-Mitsubishi UFJ, Ltd. and Mizuho Bank, Ltd and with the benefit of a KEXIM guarantee are Korea Exchange Bank and Nonghyup Bank, PT Bank Sumitomo Mitsui Indonesia and The Bank of Tokyo-Mitsubishi UFJ, Ltd. The project has long-term agreements to sell 1 million tons of LNG per year to Japan’s Chubu Electric Power Co., Inc. and 300,000 tons a year to Kyushu Electric Power Co., Inc. It will also provide 700,000 tons a year to KOGAS. The Donggi-Senoro project will significantly contribute to diversifying the stable supply sources of LNG to Japan and Korea, which rely heavily on it as fuel for power generation and commercial and household use.
The Allen & Overy team was led by partners Scott Neilson and Adam Stapledon, Jakarta-based foreign legal consultant Andrew Digges and Tokyo-based counsel Kristian Bradshaw. Additional advice was provided by associates Scott Lovell, Xue Wang, Hans Menski, Cindy Riswantyo, Teruma Naito, Matt Del Rosso, Deska Widianto and Sofie Chandra. Allen & Overy partner Adam Moncrieff worked on EPC aspects of the project. Scott Neilson, Kristian Bradshaw and Jonathan Siu worked on the shipping aspects of the project. Allen & Overy also advised on the LNG Sale and Purchase Agreements.
Source: www.allenovery.com
