3 March – LAWFUEL – The Law News Network – An international team of Herbert Smith lawyers is advising Sumitomo Chemical as joint sponsor of the Rabigh project, which will be one of the largest integrated refining and petrochemical projects ever built.
Thursday 2 March saw the signing of the key finance documents for the $5.8 billion project financing, which will see the construction of a worldscale refinery and petrochemical complex at Rabigh, on the west coast of Saudi Arabia. The Islamic tranche of the facilities is thought to be the largest to date in any project finance transaction.
The project involves the upgrade of Saudi Aramco’s existing refinery at Rabigh together with the development of various petrochemical production units, an independent power and water project (IWSPP), and related utilities and offsite facilities. The total cost of the project is approximately $9.8 billion.
This landmark deal for Saudi Arabia, a country where significant project financed energy and infrastructure projects are anticipated in the coming years, is another addition to Herbert Smith’s expanding practice in this important region. The Project is a 50/50 joint venture between Sumitomo Chemical Co, Ltd and the Saudi Arabian Oil Company (Saudi Aramco), and will process Arabian Light crude plus ethane and butane feedstock. The project is proposed to be the nucleus for a major industrial park in the Kingdom of Saudi Arabia and could prove to be a cornerstone for the development of the Red Sea economy.
The Herbert Smith team has been working on the project since its appointment in May 2004. The joint venture agreement was signed between the sponsors on 1 August 2005. We advised Sumitomo Chemical on the joint venture, financing and other project documentation (including on the marketing and offtake arrangements, construction contracts, intellectual property issues, environmental aspects and other underlying contractual arrangements).
The lead partners on the project, Andrew Calderwood, David Clinch and David Laurence commented:
“We are delighted to have advised one of the two sponsors in this transaction, which is regarded as a landmark deal for Japanese participation in the Middle East and for the Kingdom of Saudi Arabia. The scale and complexity of the transaction has demonstrated the depth and ability of our global energy and project finance practices. A global team at Herbert Smith has provided a dedicated 24-hour service and demonstrated how our integrated practice teams work closely together.”
The Herbert Smith team, led by David Clinch (Energy/Project Finance) in Tokyo and by Andrew Calderwood (Project Finance) and David Laurence (Energy) in London, has involved more than 50 lawyers across our global network of offices. The team have provided extensive round the clock support. The construction team was led by Nick Downing (London), Tracy London (associate) and Craig Shepherd (Hong Kong) with support from Stephen Murray, construction partner Tony Dymond, David Moore and Martin Bridgewater (consultant). Joel Smith led the team advising on technology licensing and related intellectual property matters. Mark Newbery and Stephen Murray led the team advising on the IWSPP, while Stephen Rayfield led the team advising on the arrangements for the transfer of the existing refinery to the project and due diligence, and Maria Cull (consultant) led the environmental team. Other partners involved included Richard Forsdyke in relation to property issues.
David Wells of the Law Office of Dr Mujahid M Al-Sawwaf provided Saudi Arabian legal advice to Sumitomo Chemical. White & Case LLP advised Saudi Aramco. Clifford Chance LLP advised Japan Bank for International Cooperation and the other lenders. Al Jadaan Law Firm provided Saudi Arabian legal advice to the lenders. The Law Office of Mohammed Al-Sheikh provided Saudi Arabian legal advice to Saudi Aramco. Norton Rose advised the consortium awarded the contract to build the IWSPP.