April 20, 2018

Milbank Advises CELSE on Largest LNG-to-Power Project in Latin America


Financing for Porto de Sergipe I Thermoelectric Complex represents largest cross-border energy-related transaction in Brazil in recent years

Milbank LLP has advised CELSE – Centrais Elétricas de Sergipe on the financing for the Porto de Sergipe I Thermoelectric Complex. The Project, located in Barra dos Coqueiros in the State of Sergipe, is the largest cross-border energy related transaction in Brazil in recent years and the largest LNG-to-Power deal completed to date in Latin America.

The financing of approximately R$5 billion (equivalent to approximately US$1.5 billion) encompassed the issuance of approximately R$3.37 billion of Brazilian debentures, in addition to commitments from IFC (International Finance Corporation) and IDB Invest. The debentures were issued with coverage from SERV (Swiss Export Risk Insurance), the Swiss export credit agency.

The Project is comprised of a gas-fired combined cycle power plant with a total installed capacity of 1.5GW, a 33-km transmission line, an offshore terminal where a chartered FSRU (Floating Storage and Regasification Unit) will be moored, and a subsea and underground gas pipeline to transport the regasified LNG from the offshore terminal to the plant. When completed, the Project will be the largest thermal power plant in Brazil by capacity.

The Sponsors are EBRASIL - Eletricidade do Brasil, one of the largest independent power producers in Brazil, and Golar Power, a joint venture between the Norway-based Golar LNG and the US-based investment fund Stonepeak Infrastructure Partners.

The cross-border Milbank team included NY-based Project, Energy and Infrastructure Finance partner Dan Bartfeld, senior associate Fernando Capellão, associate Rhys Howard and international attorney Talita Duarte, as well as Capital Markets partner Stuart Morrissy; São Paulo-based Capital Markets partner Tobias Stirnberg; a London-based team including Project, Energy and Infrastructure Finance partners Matt Hagopian and Manzer Ijaz, senior associate Felicia Hanson Ofori-Quaah and associates Robert Thompson and Tathyane Vosgerau and Washington, DC-based associate Eusebius Luk.

Mr. Bartfeld, head of Milbank’s Global Project, Energy and Infrastructure Finance Group, said: “We are pleased to work with CELSE on this landmark LNG-to-power financing, the largest completed to-date in Latin America. The success of the financing highlights the growing role of LNG in the global energy markets, as well as Brazil’s ability to attract massive amounts of capital for a well-structured energy project.”

“We are seeing a tremendous increase in LNG-to-power financings throughout the world, as well as a corresponding increase in liquefaction projects. CELSE is capitalizing on this trend, which we anticipate will only pick up momentum in the coming years.” added Mr. Hagopian.