I typically work with oil and gas investment projects, where I act as a service provider for a company going into an offshore project, such as the development of an oil field somewhere in the world – typically in Mexico, Indonesia or Brazil. I typically act related to a construction contract and a contract for an oil company to lease this unit for a certain time. Then I do all the legal aspects of that project together with my team.
It depends on the project but very often it’s timing – to be able to deliver a certain asset at a certain place and time and at a certain cost. So, it’s timing and cost. Those can be the two most serious obstacles.
I could write a book about that. What we do is make a risk matrix for projects, which will be different from country to country and project to project. We have to be very focused on the major risks. But it’s not my job to tell clients not to take risks, only to help asses risk and to price it correctly.
It’s important to understand and respect how they, and everyone involved in the negotiation, think. They have their own agendas and considerations and you need to understand and respect these to build up the right negotiation atmosphere.
Big surprises that happen late in the process. Very often this is to do with financing, that you’re not able to finance the terms you have negotiated and the project proves not to be bankable in the end.
A lot of money may be at stake when you are preparing documents that will formalize huge commitments.
Sometimes it feels like a big responsibility but it also feels like my clients put a lot of trust in me. I think my job is to ensure that I remember all the bits and pieces when the client is just focusing on closing the deal. Sometimes I feel that I’m creating more problems than I’m solving but that’s part of my job. Balancing these things is an art.
I’m very inspired by the young people I work with, particularly when I see them coming into my team and proving themselves; in that the client responds positively to what they do. Having the client take us into the early stages of a project is also rewarding. Then we feel we are in a partnership and not just an external advisor.
Traditional banks are still active in this market but I think they scrutinize projects more than they used to and they don’t have the appetite to finance speculative projects without good cash flow. Chinese banks and lease companies are becoming very active but, primarily for projects with a Chinese content. The bond market has been very active over the last few years both for both project financing and unsecured corporate debt. I think the trend is that banks and bonds are working more together in a capital structure, and that banks welcome the bonds to offload the risk taken by banks. In short, capital is definitely available for good offshore projects.
I think our understanding of the business is important and adding value for our clients, particularly related to risk assessment and pricing of services. We bring to the table experience from previous projects, so we know what to do and what to look for.
Photo: Wikborg Rein