Projects & Energy

20 Sep 2025 | LexMatch

INTRODUCTION

Projects lawyers may work across or specialise in one or more of the following areas: (i) infrastructure (e.g. toll roads, railways, bridges, telecoms, utilities, water, waste, ports), (ii) natural resources (e.g. oil, natural gas, coal, mining), (iii) renewable energy (e.g. solar plant, hydroelectric plant, wind farm), and (iv) public buildings (e.g. airports, sports stadiums). While there is some conceptual overlap with construction and real estate work, the complexity and scale of such projects mean that law firms maintain dedicated projects practices serving these clients. The work is very international in nature, with emerging countries featuring more prominently, given the greater need for infrastructure improvement and exploitation of natural resources in these locations.

The high cost of such projects means that securing financing is critical. However, project finance differs from general corporate lending. The latter typically involves an operationally active business borrowing to finance its working capital or expansion plans, and repaying the loan from its consolidated revenue streams. On the other hand, project finance is typically taken up by a special purpose vehicle (“SPV”) set up specifically to develop the project, and the lender provides limited/non-recourse financing, i.e. the lender must rely on the revenues generated from the specific project for its repayment and returns, and aside from security against the project assets and SPV shares, the lender cannot seek further recovery from the sponsors if the project fails.

Hence, a lot of focus and detail goes into each contract underlying the project to ensure that timelines and deliverables are objectively set out, cash flow and costs are tightly managed, and risks and responsibilities are clearly allocated among the various parties in a project.

SUB-AREAS

The work is sometimes divided into upstream, midstream, and downstream work. In the context of an energy deal, “upstream” refers to the extraction of the oil/gas/resource, “midstream” refers to the refining, processing, and transport of the resource (e.g. pipelines, refineries), and “downstream” refers to the distribution of the resource (e.g. petrol stations, electricity and gas providers).

The clients that you may represent include: (i) sponsors/developers who together form a joint venture consortium (via a project company SPV), through which they contribute equity capital and the technical know-how for the project, (ii) lenders/financiers who provide debt financing via loans or bonds (e.g. banks, institutional investors, multilateral institutions, export credit agencies, debt funds), (iii) the contractor(s) engaged by the sponsors who will supply the materials and be responsible for the design, construction, operation and/or maintenance of the project, (iv) the offtaker who purchases the outputs/end products produced by the project, and (v) insurers. The most significant representation would be as project counsel (for the sponsors/developers) or as lender counsel (for the lenders/financiers).

WHAT YOU CAN EXPECT

  • The relationship between the sponsors/shareholders who have teamed up to promote the project is typically governed by a shareholder or joint venture agreement, with key terms covering the injection of funding and capital, voting requirements, transfer restrictions, dividends policy, etc. There could also be M&A elements involved, where an investor or stakeholder wishes to exit from an existing project. Given the complexity and bespoke nature of the underlying contracts to each project, it is common for projects lawyers (as opposed to general M&A practitioners) to be engaged for the sale and purchase of a sponsor’s equity stake. Additionally, the multiple stakeholders involved in a project also makes for a relatively complex contractual structure.
  • The sheer cost of most projects means that a syndicate of lenders (rather than a single lender) will be involved in financing the project. These lenders may be both foreign and from the country in which the project is located. Similar to a syndicated banking & finance deal, each bank may fulfil different roles, such as being the arranger, underwriter, facility agent, and – more unique to a project finance deal – technical bank (which will have expertise to evaluate the feasibility of projects, calculate the adequate cover ratios, and monitor the project’s progress). The finance documents will set out the terms of the debt financing, such as the use/purposes of the loan, drawdown period, conditions precedent, warranties, information covenants, financial covenants, events of default, security, intercreditor arrangements, etc. Repayment terms are particularly critical and may specify that all the project’s cash flows be directed to a specified bank account, and for a minimum percentage of it to be applied towards the debt repayment. Lawyers will draft and negotiate these finance documents, and ensure fulfilment of all conditions precedent prior to the drawdown.
  • “Project documents” usually refer to the suite of documents including:
    • construction contract – often on a turnkey basis, where a single general contractor assumes full responsibility for the timely completion of the project, although a sponsor or a separate management company may sometimes assume the responsibility of managing the project;
    • operation and maintenance contract – similarly, this may be taken on by a sponsor or the project company or the engaging of an experienced operator, and how risks and profits are allocated largely depends on whether pricing is on a fixed price, cost plus or target/incentive-driven model;
    • supply of equipment, fuel, materials, technology and/or transportation;
    • offtake/sales agreement – while cashflow will be guaranteed with the signing of a pre-agreed long-term purchase agreement, this is not always possible and sometimes selling will have to take place on the open market; and/or
    • concession agreement/licence – granted by the local government, to give the project company the right to exploit, develop and operate the project (subject to possible conditions such as the concession period, payment of fees, default and forfeiture events, final handover, etc). 
  • When advising a potential lender, investor or purchaser, lawyers will do due diligence on the project and review the underlying agreements, and advise their client on how risks and responsibilities are allocated among the various stakeholders in the project (e.g. requirement to commit management and technical resources, terms of equity or debt funding, transfer restrictions, completion guarantees or cost overrun guarantees, collateral warranties, liquidated damages, taking of security and charges, insurance coverage, termination and forfeiture risks, force majeure, pre-agreed sales, etc). To provide a comprehensive picture to the client, this often requires legal input to be read and understood together with commercial, technical, technological, insurance, environmental issues. Therefore,  a projects lawyer must be interested in learning about these non-legal aspects of the deal as well and working together with other experts and consultants. Having a technical/engineering background can be a plus.
  • As a project can take place in any country, you will have to liaise with local counsel to understand how local laws and regulations apply to the project, e.g. what challenges may be brought locally to stop or hinder the project’s development. This may be especially challenging in emerging countries where the legal system is less developed or clear.