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Herbert Smith Freehills advises Pertamina-Rosneft JV on engineering contracts for Indonesian mega-refinery

01 November 2019 | Indonesia
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Leading global law firm Herbert Smith Freehills has advised a Pertamina-Rosneft joint venture company on the award of engineering contracts for a new US$16 billion refinery in Indonesia.

The high-tech refinery in Tuban, East Java, will increase Pertamina's refining capability and strengthen Rosneft's presence in the Asia-Pacific petroleum market.

The project company has appointed Spain's Tecnicas Reunidas SA to carry out the basic engineering design and the front-end engineering design for the project's construction.

"We're delighted to have advised on this important development for the two companies," said partner Danila Logofet, who has led the team advising the project company since 2018.

"Tuban will be one of the most technologically advanced refineries in the world, so the engineering contract process was more complex than usual."

The firm worked in partnership with longstanding Indonesian associate firm Hiswara Bunjamin & Tandjung to advise on the project.

"This is one of many energy and infrastructure projects which have advanced following the recent Indonesian presidential elections," said Matthew Goerke, senior international counsel at Hiswara Bunjamin & Tandjung.

"Greater political certainty is refocusing project companies, financiers, construction companies and bidders on Indonesian projects, and we expect more announcements of this type into 2020."

The Pertamina-Rosneft joint venture project company that will build and operate the new refinery was established in October 2017, with Pertamina holding a 55% stake and Rosneft 45%.

"Increasing Indonesia's refining capacity to meet growth in demand will enable the country to reduce costly petroleum imports," said Global Head of Energy Lewis McDonald. "This cooperation by two oil nationals is vital to support the ongoing development of the Indonesian economy."

Counsel Mark Veitch led the negotiations together with Rosneft counsel Alexey Kolentsev, supported by senior associate Oxana Koerner and associates Yulia Turkina and David Douglas. 

Senior international counsel Matthew Goerke and associate Dimas Syailendra Adji at longstanding associate firm Hiswara Bunjamin & Tandjung in Jakarta dealt with the corporate workstream.

Partners David Clinch and Adrian Cheng and counsel Keith Gamble provided project guidance and advised on finance aspects of the agreements. 

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