Norton Rose recently acted for Sinopec Kantons Holdings Ltd in the latter’s purchase of a majority stake in a United Arab Emirates-based oil storage company. Sinopec decided to purchase the stake primarily to ensure storage space for itself in the major eastern UAE port of Fujairah.
In the December 2011 transaction, Sinopec Kantons, a Hong Kong-listed subsidiary of Chinese oil giant Sinopec Group, said it will take over 50 percent of the issued capital shares of the Fujairah Oil Terminal FZC (FOT) from its Hong Kong owner Concord HK for $25 million. It may also request to buy an extra one percent for $9 million to acquire the controlling share, according to the agreement.
The companies did not specify when the construction of the terminal will begin, or when it will become operational.
Norton Rose dispatched a strong team of lawyers from the firm’s Hong Kong, Beijing, Dubai, and Singapore offices to advise Sinopec Kantons on this deal.
FOT will principally engage in operating oil storage facilities in UAE’s Fujairah Free Zone, and will develop an oil storage project with a capacity of 1.125 million cubic metres in the emirate of Fujairah, located adjacent to the Port of Fujairah.
With an additional commercial storage agreement, Sinopec Kantons has reserved 50 percent of FOT’s storage volume in Fujairah Port, one of the largest bunkering ports in the world.
Sinopec Kantons' agreement with Concord HK marks the second investment by a Chinese company into storage facilities in Fujairah, one of the seven emirates which make up the UAE. Fujairah plans to more than double its oil storage facilities from the current 121 to 262 tanks by the end of 2012. This will bring the emirate's overall storage capacity to more than 7 million cubic meters from the current 3 million cubic metres (approximately).
"We are delighted to have had the opportunity to advise on this significant acquisition for Sinopec…The success of the transaction also demonstrates Norton Rose Group's capacities in assisting Chinese corporates on their outbound investments,” said Andrew Abernethy, Norton Rose’s Hong Kong partner, and the team leader for this deal.
“The transaction involves complex legal issues specific to petroleum and hydrocarbon storage terminal projects. We are proud to have an integrated cross border team based in Hong Kong, Beijing, Dubai, and Singapore with the specialist skills necessary to execute deals of this nature,” he added.
Abernethy’s team for this deal included Jane Clayton, Martin Preston, Ola Al-Kadi, Sally Cash and Osama Abuljebain from Dubai; Terrence Montgomery, Fang Min, Natalie Caton and Marco Lam from Hong Kong; Daniel Yong and Cai Si Xuan from Singapore; and Charles Desmeules and Michael Wilton from Beijing. ALB
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