Herbert Smith Freehills closes second Sumitomo investment in offshore oil production vessels

Leading global law firm Herbert Smith Freehills has advised Japanese trading house Sumitomo Corporation on its second investment in a floating production storage and offloading vessel (FPSO) destined for the Marlim 2 field, offshore Brazil.

Sumitomo has acquired a 25% stake in a joint venture from Malaysia’s Yinson to charter and operate the FPSO for Petrobras, the Brazilian national oil company, for a term of 25 years.

The firm’s energy team advised on a similar acquisition in 2017, where Sumitomo invested in a 26% stake in a joint venture, again with Yinson, for an FPSO operating in Ghana.

The charter and operating contracts for the FPSO are worth an estimated value of US$5.4 billion. The FPSO vessel is now under construction and is scheduled to commence operation in the first quarter of 2023. Once in operation, the FPSO will have the capacity to process up to 70,000 barrels of oil per day and 4 million cubic meters of natural gas.

“Sumitomo is an important global client of the firm across so many sectors and regions, so we’re very pleased it turned to us for this second investment,” said Asia Head of Energy Hilary Lau.

The team worked on all aspects of the transaction, including initial structuring, due diligence, transaction documentations, negotiations, competition and financing.

“FPSO investment and operation is a particular strength of our energy team, and this is the second FPSO deal that we’ve closed in the past four months,” said Andrew Blacoe, Japan Head of Energy.

"The transaction is another great example of the firm's strong position in the Brazilian oil and gas sector,” said Ed Dougherty, Americas Head of Energy.

Hilary led the team advising Sumitomo, assisted by associates Charles Wong, Patrick Corrigan and Yoon Nam.

Partners Kyriakos Fountoukakos and Adelaide Luke assisted on competition law aspects, with associates Howard Chan and Sara Midori Martinez.

The firm’s formal law alliance partner Prolegis advised on Singapore law aspects, led by managing director Ban Leong Oo, director Sandra Tsao and senior associate Sze Min Lim.

Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados advised on Brazilian law, while Van Doorne N.V. advised on Dutch law.