Joining energy, infrastructure and tech capabilities to advise on large-scale LNG project
2 min read
Structured equity appeals to operators and investors because funding for major projects can be obtained with a debt-like cost of capital while allowing the financing to be treated as equity for ratings agency purposes—essentially offering clean, debt-free capital while unlocking access to predictable, low-risk returns. We are monitoring how this trend is expanding beyond the energy and infrastructure sectors into other industries.
Partner|New YorkM&A Partner
Client opportunity
Blackstone Credit & Insurance led a US$7 billion investment in Phase 2 of Sempra Infrastructure Partners’ Port Arthur LNG, a natural gas liquification and export terminal in Jefferson County, Texas. Blackstone appointed us to advise the co-investors in the consortium. The deal gives co-investors the opportunity to participate in a large, long-term energy asset with the potential for stable, contracted cash flows, and with global significance for energy security and the energy transition.
Our approach
We combined our energy and infrastructure sector knowledge with our integrated private capital offering to advise the co-investors on this complex deal related to the development of a critical new-build energy project. Our cross-practice team included Project Development & Finance, Debt Finance, Capital Markets and M&A lawyers working together to provide an innovative, large-scale and flexible high-grade capital solution.
In addition, we drew on our detailed understanding of the technical aspects of this particular asset type. The decades-long experience of our global LNG practice positioned us to advise on the complex construction, long-term sales contracts, multi-source financing and cross-border regulatory issues that typically arise during these projects.
Outcome
The investment will advance the development, construction and operation of Phase 2 of the Port Arthur LNG, which will take natural gas, transform it into liquefied natural gas and load it onto ships for export. The project is strategically located near large supplies of natural gas and sits on the Sabine-Neches Ship Channel, with access to global shipping routes.
Phase 2 will include two natural gas liquefaction trains—large processing units—one LNG storage tank, and related facilities and infrastructure. Phase 2 has a planned maximum output of approximately 13 million tonnes per annum (Mtpa). Overall, the project will help the US natural gas industry to remain a leading and reliable supplier of energy to global markets, addressing rising global energy demands, aiding the energy transition and supporting economic growth at the local, regional and national levels.
