Milbank Advises Lenders on First-of-its-kind HVDC Transmission Project for MENA Region

Milbank LLP advised a lender group of export credit agencies and international financial institutions in financing a high voltage direct current (“HVDC”) subsea transmission system in the United Arab Emirates issued by Abu Dhabi National Oil Company (“ADNOC”) and Abu Dhabi National Energy Company PJSC. Upon completion, the US$3.8 billion project will be the Middle East and North Africa region’s first HVDC subsea transmission system.

The lender group included government financial institutions Japan Bank for International Cooperation (“JBIC”) and the Export–Import Bank of Korea (“KEXIM”) and commercial banks BNP Paribas Fortis SA/NV, Mizuho Bank, Ltd., Standard Chartered Bank and Sumitomo Mitsui Banking Corporation, DIFC Branch – Dubai. The project will be developed by a consortium comprising Korea Electric Power Corporation, Kyushu Electric Power Company, Inc. and Électricité de France S.A. The consortium was chosen to develop the project upon winning a highly competitive bidding process.

The project will develop and operate two separate HVDC systems where ADNOC operates substantial oil and gas production facilities. ADNOC currently generates electricity for these operations through gas-powered turbines which are nearing the end of their design life. Additionally, as the company further develops its offshore oil and gas reservoirs, it will require significantly more electricity capacity.
The HVDC systems will not only be a more reliable, efficient and cost-effective source of electricity, but they will also reduce the carbon footprint of ADNOC’s offshore production facilities by a significant proportion. By decreasing the inefficient use of gas, ADNOC will also be able to divert gas to overseas markets. The project will be built on a build, own, operate and transfer basis by the consortium’s project company and is expected to be commercially operable by 2025.

“We understand that this was ADNOC’s first greenfield project financing and so we were honored to be involved in advising the lenders and to help bring all parties together to make this project financing a success,” said Milbank partner Aled Davies.

Mr. Davies led the Milbank deal team, which included Tokyo-based special counsel Justen Fleming, associates Anthony Scott, Aaron Mundy, Dan Miyagishi, Kei Kitatani and JBIC secondee Lewis Blundell; Seoul-based partner David Gartside and special counsel Brian Youn; and London-based partners John Dewar and James Warbey and associates, Suzanne Szczetnikowicz, Joanna Mobed, Vicky May and Robert Wyse-Jackson.