Hogan Lovells and White & Case have recently profited from China’s continued interest in Latin America’s oil sector. White & Case was engaged to advise on a China Development Bank (CDB) dual loan facility (combined value US$20 billion) to Venezuela, marking the largest credit line that CDB has extended to any country, while Hogan Lovells advised the two recipients of the loans, Petroleos de Venezuela (PDVSA), the state-owned oil company, and BANDES (the Venezuelan Social and Economic Development Bank under the Ministry of Finance of Venezuela).
PDVSA and China National Petroleum Corp (CNPC) also signed a separate US$16.3 billion joint venture agreement for a project that will pump one million barrels a day of oil for Chinese refineries.
China had earlier lent Venezuela US$4 billion to finance development projects in return for future oil supplies. The loan was to go toward financing 19 development projects involving electricity, agriculture, mining, technology and oil.
The financing of the latest deal required negotiations involving three systems of law, and also included contracts for the sale of oil by PDVSA to China National United Oil (Sinoil). “The first US$10 billion facility was governed by English law, the second RMB70bn facility was governed by Chinese law, while the oil contract between PDVSA and Sinoil was governed by Venezuelan law,” said Hogan’s Bruno Ciuffetelli, who advised PDVSA and BANDES, along with Keith Larson, Jose Valdivia, Luis Bottaro, Ken Hawkes and Wei Jun.
The deal also saw close involvement from PDVSA in-house counsel Armando Giraud and BANDES in-house lawyer Pablo Bujanda.
White & Case’s lead partner advising CDB was Li Xiaoming.
The firm is one of the bank’s long-term legal advisers. It previously advised it on a US$8.4 billion two-phase financing of the Taishan project.
According to Venezuelan state bank Bancoex, trade between China and Venezuela surged to US$8.9 billion in 2008 from US$85 million in 1999.
