Herbert Smith’s China energy team has advised Sinopec International Petroleum Exploration & Production Corporation (“SIPC”) on the subscription through its subsidiary for additional shares in Australia Pacific LNG Pty Ltd for a net consideration of approximately US$1.1 billion, which on completion will raise Sinopec’s ownership interest from 15% to 25%. ConocoPhillips’ and Origin Energy’s respective ownership interests will be reduced to 37.5%.

The subscription agreement was signed and announced on 20 January 2012. The key commercial terms of the Subscription Agreement are consistent with the terms of the Subscription Agreement signed in April 2011. The Subscription Agreement is subject to approvals by the Chinese Government and the Foreign Investment Review Board in Australia, and on Australia Pacific LNG reaching a final investment decision on the second train.

Australia Pacific LNG is the leading producer of coal seam gas (CSG) in Australia and holds the country’s largest CSG reserves position. It is proposing to develop a multi-billion dollar, world-class CSG to LNG export project in Queensland. The project will develop Australia Pacific LNG’s gas fields in the Surat and Bowen basins in south western and central Queensland.

The Herbert Smith team was led by the head of Asia energy practice Anna Howell, with senior associate Monica Sun and associate Hao Su. 

Herbert Smith was legal adviser to SIPC on its subscription for 15% equity interest in APLNG which was completed in August 2011.

Anna Howell commented:

“The successful signing of this additional acquisition is significant for both Sinopec Group and Australia Pacific LNG. China’s oil and gas national oil companies have emerged as confident players in global upstream merger and acquisition transactions. We are delighted to continue to play an important role in their activities.”

SIPC’s Australian counsel was Blake Dawson. Australia Pacific LNG Pty Ltd was advised by Clayton Utz.