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Baker Botts and Herbert Smith Freehills Advise on Novatek Arctic LNG 2 Stakes Sale to CNOOC and CNPC

Baker Botts and Herbert Smith Freehills Advise on Novatek Arctic LNG 2 Stakes Sale to CNOOC and CNPC

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The Moscow and London offices of Baker Botts have advised PAO Novatek on the sale of a 10% participation interest in the Arctic LNG 2 project to each of China National Offshore Oil Corporation and China National Petroleum Corporation. Herbert Smith Freehills advised China National Oil and Gas Exploration and Development Company, a subsidiary of China National Petroleum Corporation on its investment. Pinsent Masons and Infralex reportedly represented CNOOC on the deal.

The Agreements will close in the near future and are subject to approval by regulatory authorities of the Russian Federation and the People’s Republic of China. 

According to Herbert Smith Freehills, the project will be Novatek's second liquid natural gas production facility in the Arctic after the Yamal LNG plant, in which CNPC currently holds a 20% shareholder interest. 

The Arctic LNG 2 project envisages constructing three LNG trains, each with a capacity of approximately 6.6 million tons per year, using gravity-based structure platforms. The project is based on the hydrocarbon resources of the Utrenneye field. Production is expected to begin between 2022 and 2023.  

Novatek is an independent natural gas producer in Russia. The company is principally engaged in the exploration, production, processing, and marketing of natural gas and liquid hydrocarbons and have more than 20 years of operational experience in the Russian oil and natural gas sector. 

The China National Offshore Oil Corporation is a producer of offshore crude oil and natural gas in China and is an independent oil and gas exploration and production company. The CNOOC mainly engages in exploration, development, production, and sale of crude oil and natural gas. Its core operation areas are Bohai, Western South China Sea, Eastern South China Sea, and the East China Sea in offshore China. Overseas, the Group has oil and gas assets in Asia, Africa, North America, South America, Oceania, and Europe.

The China National Petroleum Corporation is an integrated international energy company. Based in China, CNPC has oil and gas assets and interests in more than 30 countries in Africa, Central Asia-Russia, America, the Middle East, Asia-Pacific, and other regions. CNPC is an oil and gas producer and supplier, as well as a global oilfield service provider and a reputed contractor in engineering construction, with businesses covering petroleum exploration and production, natural gas and pipelines, refining and marketing, oilfield services, engineering construction, petroleum equipment manufacturing, and new energy development, as well as capital management, finance, and insurance services.

The Baker Botts team included Special Counsel Konstantin Litvinenko and Associates Natalia Mikheeva and Nikolai Gryzunov in the Moscow office, and Partner Mark Rowley, Senior Associate Matt Lewy, and Associate Alex Kerrof in the London office.

The Herbert Smith Freehills was led by Hong Kong-based Partners Danila Logofet and Hilary Lau and Beijing-based Partner Monica Sun. The team in Moscow included Counsel Evgeny Yuriev, Senior Associates Angelina Leushkina, Sergey Kolobov, Sergei Eremin, and Oxana Koerner, and Associates Elvira Vanieva, Alexander Chuprunov, and Yulia Turkina. The Beijing team included Partner Calvin Ho, Senior Associates James Zhang and Jie Li, and Associates Yunfei Guo and Qiujie Tan. In Hong Kong the team consisted of Senior Associate Yida Xu and Associates Emilie Soust and Charles Wong.

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