Herbert Smith Freehills advises Korea Gas on investment in floating LNG project in Mozambique

Herbert Smith Freehills has advised long-standing client Korea Gas on its participation in the US$11 billion Coral Floating LNG project in Mozambique.

KOGAS has a 10% interest in the project, which is led by Eni and also involves China National Petroleum Corporation, GALP (of Portugal) and ENH (of Mozambique).  The project marks a series of firsts:

• first floating LNG liquefaction project to be project-financed globally
• first floating LNG liquefaction project in Africa
• first LNG project for Mozambique
• first LNG development by Eni, as an operator.  

The project finance covers around 60% of the cost of the floating LNG facilities.  The financing agreement has been subscribed by 15 major international banks and guaranteed by five export credit agencies.

The Coral gas field, discovered in May 2012, is located within Area 4 offshore Mozambique and contains approximately 450 billion cubic meters (16 TCF) of gas in place. It is scheduled to begin production in 2022 and will be the first significant gas development to be monetised offshore Mozambique, bringing a significant boost in revenue for this emerging African economy.

All of the LNG to be produced from the field has been contracted to BP under a take or pay LNG offtake contract spanning over 20 years.

"This was a hugely complex project and we're pleased to have been able to advise KOGAS on every step of this milestone project, since early 2015," said partner Lewis McDonald, who led the firm's cross-border energy team advising KOGAS.  

"Herbert Smith Freehills has a strong focus on assisting our clients to achieve success in major energy infrastructure projects in emerging markets.  These projects are extremely challenging and require a deep understanding of the relevant market and sector, as well as a strong appreciation of our clients' needs.  I am very happy that our team could assist KOGAS to achieve success in Africa and look forward to continuing to support KOGAS."

Lewis was assisted by senior associate Ken Nam in Seoul, partner Martin Kavanagh and senior associates Tom Marshall and Keith Gamble in London, as well as partner Graeme Gamble in Perth.