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IBERIAN LAWYER ENERGY & RENEWABLES REPORT 2012 Stabilising the energy market An abstract from Iberian Lawyer November / December 2012 For further information please contact [email protected] www.iberianlawyer.com

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Page 1: Energy & Renewables Report

November / December 2012 • IBERIAN LAWYER • www.iberianlawyer.com

EU & CompEtition REpoRt

IBERIAN LAWYER

ENERGY & RENEWABLES REPORT 2012Stabilising the energy market

An abstract from Iberian LawyerNovember / December 2012For further information please contact

[email protected]

Page 2: Energy & Renewables Report

• IBERIAN LAWYER • November / December 2012 www.iberianlawyer.com

It is no surprise that, in a downturn, a drop in transactional activity may be matched, or even exceeded, by a rise in disputes.

This requires new approaches to case management. With long delays and rising costs, courts are increasingly seen as inefficient, expensive and unpredictable.

In-House Counsel, therefore, require a strategic framework for managing a higher number and variety of disputes in the most effective, as well as efficient way.

For the larger cases, the challenge is in anticipating the resources required, risks and potential benefits involved. With lower value litigation, efficiency and cost reduction is key.

At the same time, while companies must be prepared to fight, they must also be open to talk. Deciding which approach to adopt, and at what time, is their biggest challenge.

Master Class

To fight or settle:Managing disputes more effectively?

Corte de Arbitraje de Madrid, January 25th, 2013

In association with:

A group of General Counsel and Heads of Legal will join dispute resolution experts from leading law firms to discuss new approaches to managing disputes more effectively.

Master Class key issues:

Techniques for dispute prevention; •

The risk and benefit analysis ─ when to fight or settle;•

Early case assessment;•

Arbitration and alternatives to using the courts; •

Effective case management for arbitrations.•

For more information please contact: [email protected]

Page 3: Energy & Renewables Report

November / December 2012 • IBERIAN LAWYER • www.iberianlawyer.com 41

EnERgy & REnEwablEs REpoRt

When the floor beneath you is constantly shifting, there is no hope of building a solid foundation on which to base an entire sector. This is the case across Iberia, as regulatory uncertainty, budgets cuts and crippling tariff deficits are presenting the energy sector with some of its toughest challenges to date.

The Iberian energy sector is one of those most heavily affected by the crisis, say lawyers. New laws, critical tariff deficit levels and drops in demand are all contributing to weakening a previously buoyant market. Regulatory uncertainty is an overwhelming problem, and there is an urgent need for stability.

In Spain, the reduction in energy demand, close to 17 percent in electricity and oil and 15 percent in natural gas since 2009, coupled with a colossal electricity tariff deficit, are having an incredibly negative impact on the whole market.

The Portuguese energy markets are also facing, and adjusting to, new challenges not only from the crisis but also from measures under the Memorandum of Understanding (MoU) with the Troika. And it is the renewables sector that has been hit hardest. The National Action Plan for Renewable Energies has been downgraded, with a reduction in production and consumption, while new licensing has been suspended.

But it is not only in Iberia that the crisis has been affecting the sector. Budget cuts undertaken by governments worldwide are penalising renewable energies on a global scale, says Manuel De Andrade Neves, Co-Head of Public and Environmental Law at Abreu Advogados. “This sector, one of the most dependent on public financing, is one of the first to suffer the impact of spending cuts and the need for governments to increase their tax revenue.”

Uncertain timesThe market is shifting, and regulators and lawyers alike are struggling to keep up. In Spain, the main problem is reducing the country’s electricity tariff deficit, which reached an impressive €24bn in December 2011, and which the Government is attempting to tackle using new regulations.

Ongoing reforms have brought about an unsustainable level of uncertainly, meaning that investors are staying away and many projects have been delayed, or cancelled. “The regulatory risk is high, and it is quite difficult to carry out any new deals in Spain,” says Luis Pérez de Ayala, Energy Partner at Cuatrecasas in Madrid, “which is especially problematic for companies with big portfolios that they are trying to divest.” The hope is that once some level of stability is brought to the regulatory environment then the market will pick up.

For the first time ever the country also has a gas tariff deficit, principally due to falling consumption levels, and the future of the renewable sector is also at risk. The market has moved from the development of renewable energy being a ‘must’ to where it begins to be questioned, says Javier Santos, Head of Energy at DLA Piper Spain, both in terms of overall capacity and cost.

The Government has drastically cut off the feed-in-tariffs for new renewable and cogeneration projects and reduced the tariffs for certain types of operating plants. Subsidies have also been reduced in a bid to lower the electricity tariff deficit, and in January 2012, they were frozen for any new

Stabilising the energy market

El sector de la energía en la Península Ibérica

es uno de los más afectados por la crisis, afirman los abogados

en el informe anual de energía y renovables.

Las contínuas reformas normativas, los niveles

de déficit tarifario y la caída en la demanda son aspectos que contribuyen

a debilitar un mercado que hace poco era boyante. La

incertidumbre regulatoria es un grave problema,

y hay una necesidad urgente de estabilidad.

Los abogados subrayan que ambos gobiernos

necesitan buscar formas de garantizar inversiones,

tanto para las energías renovables como para la energía tradicional. Si lo

logran, el sector tendrá la oportunidad de sobrevivir

a largo plazo.

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• IBERIAN LAWYER • November / December 2012 www.iberianlawyer.com42

EnERgy & REnEwablEs REpoRt

renewable projects. “Currently the big challenge is being able to build and operate a renewable project without a feed-in tariff competing with the other energy sources,” says Francisco Solchaga, Energy Partner at Araoz & Rueda.

Meanwhile the Portuguese Government, under its MoU, has committed to ensuring the sustainability of the national electricity system and to reduce the country’s energy dependence. This means tackling the tariff deficit and promoting renewable energies in a way that limits additional costs to the feed-in tariff, which includes renegotiating the contracts/licences of renewables promoters.

Cash flows have been negatively affected, as has the risk profile of projects, compounded by a lack of financing and investment — which means bad news for the sector. “Investment in renewables is still very important to free the country from its energy dependence that contributes greatly to the transaction deficit,” explains Lino Torgal, Managing Partner at Sérvulo & Associados.

The MoU commitments have, unfortunately, led to concern amongst potential investors as to possible effects on the profitability of the projects and their capacity to repay debts, and as a result investment is stagnating. And times of uncertainty in the energy markets are particularly relevant because energy investments are long-term, says Vanda Cascão, Partner at Vieira de Almeida & Associados. What this means is that investors are staying back from committing to projects as they have no idea how the reforms and the market are going to evolve in the long run. This comes at a time when the sectors need them most.

Positive signsBut it’s not all bad news. The very successful privatisations of EDP and REN were an important factor in creating some level of confidence for the Portuguese energy sector over the past year, demonstrating that opportunities are very much available and outsider interest is ongoing.

Portugal is also one of the few countries in Europe on track to meet the EU’s target of 20 percent ‘green’ energy consumption by 2020, explains João Nuno Barrocas, Partner, Energy & Natural Resources Barrocas Advogados, mostly due to the extensive use of wind energy, although solar is quickly catching up. And there are also on-going successful projects in photovoltaic and solar thermal.

In Spain, diversification is on the up in the renewables sector, particularly in auto consumption formulas, mini hydraulic centrals, biomass energy, bio fuels, energy storage systems, marine energies and wind plants. Lawyers are also seeing renewables promoters developing new projects without the need for Government subsidies, mainly in the photovoltaic sector.

And bad times are driving innovation. There is a new trend of Iberian companies seeking opportunities in other

renewable energy related markets, rather than in projects itself, says Gonzalo Olivera, Energy & Infrastructures Partner at SJ Berwin in Madrid, such as smart grids, electric vehicles or urban waste disposal industries.

Spain’s regulatory distressRegulation is currently the hot topic in

Spain. Reforms have been coming thick and fast over the past year, with plenty more

forecast on the horizon. But not everyone is happy.“The Government seems to have a disregard for the stability and predictability of the sector’s legal framework,” says Juan Ignacio González, Head of Energy at Uría Menéndez in Madrid. “Investors have carried out investments within a specific framework and if you change that and break certainty then anything can happen and it is very difficult to get the trust back.” It will therefore take a long time to recover investor confidence.

The regulatory floor is far from solid, and lawyers and their clients are struggling to know where they stand from one moment to the next. “The Government is taking short-term decisions based on economic motives,” says Juan Rodríguez Cárcamo, Of Counsel at Perez-Llorca, “and they are not looking at the long-term implications for the sectors.”

Lawyers blame the current legal framework for the unsustainable electricity tariff deficit. Income from the electricity supply has been unable to cover all the costs of the system of the past decade, and the marginal price determination system is not working properly, creating windfall profits to some and defaults to others.

With the tariff deficit to control, the Government is currently finalising new legislation — the Bill on Tax Measures on Environmental and Energy Sustainability Matters — which, if enacted as is, will have an enormous impact on the balance sheets of energy producers.

The Bill is expected to drive an increase in the price of electricity, reduce demand and decrease the profitability, and subsequent value, of energy companies. It could also seriously affect the profitability of existing projects, causing difficulties in complying with on-going financial obligations. As a consequence, there is increasing concern among investors and lenders about the long-term ‘stability’ of the regulation and the Governments support and commitment towards renewable energy.

And it doesn’t stop there. The Government is also intent on drafting a new Power Sector Act in 2013, and this is adding to the level of regulatory uncertainty. “Every time there is a new reform I get asked the same question by clients: Is this the last one? How can we be sure things won’t change over the next few years?” says Pérez de Ayala at Cuatrecasas.

At the start of 2012, the economic regime for renewable energy was also frozen, putting a halt to awarding new renewable energy feed-in tariff (REFIT), with a major impact on the photovoltaic sector. This move is expected to have an immediate impact on current renewable power pipeline, says Rafel Audivert, Public Law Partner at Roca Junyent, including circa 4,500 MW of wind power projects, 550MW of solar PV projects, as well as a number of projects in other areas.

This regulation will prevent proponents of new cogeneration, renewable energy and waste-to-energy plants from receiving contracts to sell their electricity to the grid, effectively putting the domestic renewables industry on hold

“ This sector, one of the most dependent on public financing, is one of the first to suffer the impact of spending cuts and the need for governments to increase their tax revenue

Manuel De Andrade Neves,Co-Head of Public and Environmental Law, Abreu Advogados”

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November / December 2012 • IBERIAN LAWYER • www.iberianlawyer.com 43

EnERgy & REnEwablEs REpoRt

while the government drafts a new strategy for the electricity sector.

In addition, says Raimundo Ortega, Of Counsel at Jones Day Spain, lawyers have begun to see claims against the Spanish state from investors in the renewable energy sector, as a direct result of previous regulatory changes affecting premiums.

These changes to both the traditional and renewable energy sectors are seriously undermining Spain’s credibility as a stable country in which to invest. “Regulatory certainty is required for investors to have clarity on the return they will get on their investment,” says Álvaro Valle de Alvear, Energy Partner at Garrigues in Madrid, “which means that while some of them are looking at possible opportunities, they are acting extremely cautiously prior to taking any investment decision.”

But some perspective is needed, says lawyers, no matter how bad things seem. “You cannot look at the regulatory reforms in isolation – you need to put them in the context of the economic crisis we are living in,” says Miguel Riaño, Managing Partner at Herbert Smith Freehills Spain. “We have a country-wide problem and these reforms just play a part in addressing that.”

Portugal’s legislative painThe Portuguese Government is also intent on revising the regulatory environment. It is currently enacting new laws, revising the entire sector and has completed the transposition of the Third EU Energy Package, as required under the MoU. The new laws cover electricity, renewables and cogeneration, and, says Bruno Azevedo Rodrigues, Head of Energy and Natural Resources at ABBC, consist of a complete reshaping of the system, ranging from new licensing procedures, regulated tariffs, powers of the regulator, among others.

The Package was finally transposed into domestic law in October of this year, and although in general terms it has come into force, energy operators are in the process of adjustment to the new rules. The new legislation aims to increase competition, the sustainability of the relevant

systems and provide incentives to investment directed by end-user benefits, says Duarte Brito de Goes, Partner at Campos Ferreira, Sá Carneiro & Associados, which is expected to ultimately lead to full market liberalisation in 2013.

This will impact on four key areas, explains Carla Martins Branco, Head of Energy at pbbr. It will strengthening the separation of the activities of the transmission system operation, production and marketing in order to promote competition and transparency in the market, and simplify licensing procedures. Also it will increase consumer rights and strengthen the competence and powers of the National Energy Regulator (ERSE).

ERSE can now put in place penalty measures for electricity and gas players operating domestically (pending further regulation) and settle intermediate disputes with consumers, including by arbitration.

Also, there is expected to be a reduction of 70% of the incentive granted to thermal power plants and hydro-plants. The feed-in tariffs applicable to cogeneration have also suffered a significant reduction, says João Rosado Correia, Head of Public, Energy and Environmental law at Garrigues in Lisbon, although this only applies to new cogeneration projects.

In the renewable energy sector, an agreement has been reached between the Government and APREN (Renewable Energy Promoters Association) to decrease the electricity production costs, adds Brito de Goes at Campos Ferreira. This will permit more stability in the sector, especially due to the possibility of extension of the period of ‘controlled’ sale prices.

Looking for adviceRegulatory reforms are currently dominating Iberian legal agendas, as businesses struggle to understand the impact of the regulatory changes on their businesses, investments and profits. But there are other challenges that lawyers highlight as being part their clients’ day-to-day dealings.

Spain’s new tax measures, for example, coming into play by year-end, could lead to a series of claims against the Government, say lawyers, and law firm departments are being asked by energy companies to analyse potential claims. And restrictions in specific Portuguese tax benefits have been a reason for concern, says Miguel Lorena Brito, Head of the Public

Law Department at F. Castelo Branco & Associados, in addition to increase of VAT and of property tax, which also affect energy projects.

In the Continental Europe gas sector, the price and price formulae of traditional oil-indexed gas supply contracts are being re-opened, and discussions between buyers and sellers are particularly difficult in current market conditions. “The economic implications (hundreds or even thousands of millions of Euros) make it very difficult to reach amicable agreements,” says Santos at DLA Piper Spain, “and as a consequence, litigation in this area, particularly international arbitration, is being seen more and more”.

In Portugal’s domestic market,

lawyers are busy supporting clients in disinvestment projects and managing existing projects in order to optimise costs, says Joana Andrade Correia, Partner at Raposo Bernardo, and also the restructuring and refinancing of projects and transactions in full.

The main challenges for clients with interests in renewable energy are optimising their structures, management and production, says Antonio García Muñoz, Senior Associate at Lener, and exporting their know-how in building facilities and technological development. Companies are also increasingly interested in receiving legal advice on how to set up new branches abroad to promote the building of new renewable energy facilities.

Every time there is a new reform I get asked the same question by clients: Is this the

last one? How can we be sure things won’t change over the next few years?

Luis Pérez de Ayala, Energy Partner, Cuatrecasas

“”

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EnERgy & REnEwablEs REpoRt

One further challenge linked to its Iberian counterpart, however, is that following Spain’s introduction of new tax legislation on energy production, since all electricity is traded in MIBEL (the Iberian Electricity Market), this could cause some disturbance on price throughout the market. On the other hand, says António Vicente Marques, Managing partner of AVM in Angola, these events may drive the Portuguese Government to follow the Spanish approach.

Beyond IberiaIt is no surprise, therefore, that Iberian companies are focusing on opportunities abroad due in part to the crisis but mostly to the uncertain of the domestic regulatory frameworks. Companies are diversifying their business worldwide, and while investments are mainly focused on solar and wind projects, off-shore wind projects are also gaining interest.

Spain has been a pioneer in the development of renewable energies, and many companies, due to the lack of domestic opportunities, are selling their know-how and technology abroad, says Olivera at SJ Berwin, where the development of renewable energies is currently in an initial stage, or where sector stability provides more opportunities.

And Spain’s law firms are also recognised in the international market for having a unique level of expertise. “We have seen and dealt with all types of problems that can face the energy sector,” says González at Uría Menéndez, “and that level of expertise is a great help when following clients as they take their operations abroad”.

Lawyers are seeing Iberian clients look for newer and less competitive, markets with the expectation of higher investment returns — the emerging markets, South

America and South Africa, for example — countries with high economic growth rates and abundant opportunities where they can export their know-how and proven ways of developing operations. But the highest investment, according to recent statistics, has been in India, the US and China.

“Clients are looking into other jurisdictions where they can find both financing and a more stable regulatory environment,” says

Manuel Santos Vítor Managing Partner and Head of Energy, Natural Resources, Corporate and M&A at PLMJ. “This does not necessarily mean emergent jurisdictions but also mature jurisdiction, such as other European countries and the US.”

Portuguese companies are very well prepared and able to offer high level expertise in several areas of the energy sector and therefore are an added value to energy projects developing in those countries. And many Spanish companies in renewable energies have also become global players, says Audivert at Roca Junyent. “Iberdrola, Solaria, Isofoton, ACS, Atersa, Gamesa, Acciona and Abengoa, for example, have taken part in many investment projects abroad.”

Tough times aheadBut the domestic sectors, however, do still hold potential opportunities that could lead to a reenergising of the markets. “In the Spanish renewable energy sector, the changes to the transfer tax could reactivate the M&A market,” says Valle de Alvear at Garrigues, “and provide a window of opportunity for investors”. And, lawyers say, the development of hydro, biomass and wave energy power projects in Portugal will present many opportunities in the years to come.

One cannot forget that the crisis will not last forever and there is a need to prepare the grounds for mid and long-term demand, says Covadonga Del Pozo, who recently left Cuatrecasas to form energy and environmental boutique Del Pozo & De La Cuadra Abogados, including the future of nuclear energy and adapting existing networks to future needs.

In both Spain and Portugal, the Governments are attempting to raise the development and use of renewable sources, in the implementation of energy efficiency systems, smart grids/smart metering and sustainable mobility, specifically on electric vehicles.

The new ‘green energy’ economy is hoping to generating new businesses in, for example, the development of technology

Adapting to the marketAs the majority of projects involving Iberian clients are located abroad, now more than ever, law firms are being asked for advice on a global scale. And with their clients internationalising, energy departments are finding themselves taking on more of a role of a ‘legal manager’, coordinating with local lawyers and sharing their domestic legal know-how and expertise.

Given the number of regulatory reforms, law firms are having to concentrate on reinforcing their

regulatory teams to ensure they can keep up with developments and ensuing client needs. International departments are being built up and corporate and regulatory teams are cooperating far more than before.

Departments are being increasingly asked to perform risk assessments on applicable legal frameworks and subsidies regime that may be e applicable to projects and return on investment. While also assessing the investment risks from a social, environmental and administrative

perspective and undertaking economical assessments of potential projects.

And mainly due to the total or partial divestment of foreign investment funds in projects, departments are focusing on related M&A transactions. Also, due to reductions in the feed-in-tariff of many renewable projects, companies have entered into a default in project finance and lawyers are working hard on the renegotiation of financing agreements.

You cannot look at the regulatory reforms in isolation – you need to put them in the context of the economic crisis we are living in. We have a country-wide problem and these reforms just play a part in addressing that

Miguel Riaño, Managing Partner,Herbert Smith Freehills Spain

“”

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EnERgy & REnEwablEs REpoRt

and specialised job opportunities. And the decarbonisation of the world E3 (energy-environment-economy) system means Member States will have to establish energy efficient mechanisms, and so adjust their national policies and legal frameworks — providing a big opportunity for law firms to assist.

Despite the similarities, both countries face different pressing challenges.

For Portugal, this is to reconcile reducing the tariff deficit under the MoU, while maintaining the expectations of investors and promoters of ongoing projects. All without forgetting the need for a global energy policy sufficiently attractive to retain and capture future investment.

While in Spain the pressing need is to solve the tariff

deficit and create a new and sustainable energy system from a clean base. “This is what will start to build back investor confidence in the market,” says Luis Gil Bueno, Senior Associte at Gómez-Acebo & Pombo in Madrid.

But the urgent need for investment into the Iberian energy sectors depends largely on creating regulatory stability and therefore certainty for investors. Lawyers agree that both Governments need to focus on guaranteeing investments, both for renewables and conventional energies.

If they do so, then the sectors have a chance of conquering the crisis in the long-term.In the meantime, law firms are left firefighting against regulatory uncertainty with no real end in sight.

Doing business in Latin America is rewarding but, as in many other jurisdictions involving multiparty and complex contractual structures, it represents some challenges that need to be properly assessed and managed, says Carlos Solé, who leads the Energy Regulatory Practice at KPMG Spain.

With energy one of the tightest of the regulated markets, businesses entering the region must ensure they keep to local regulations, while walking that delicate balance between ‘changing’ and ‘playing by’ the rules.

“It is good to understand Directives and Royal Decrees,” says Solé, “but it is the actual functioning, operation and evolution of regulation that is just as important”. In particular, energy companies need to be aware of what he calls “micro-regulation” – discovering further levels of compliance not immediately obvious.

When it comes to international disputes, risks can range from renationalisation and retroactive regulation, to joint ventures and entering new areas of technology. Countries can set a long-term feed-in-tariff agreement for renewable energy projects and alter in a retroactive way to look at a global tariff reduction for consumers.

Pablo Bernad, Head of KPMG Forensic and Risk Consulting, Europe and Solé are advising a growing number of Spanish businesses on disputes with Latin America governments. These range from expropriations, nationalisations and long-term contracts amendments to retroactive changes in regulation, having a huge impact on a company’ performance and business model.

In such cases, companies need to go

beyond establishing the legal facts. “They need to explain how the regulation affected the economics of the business and also show the quantity of losses or value,” says Bernad, “and demonstrate, in clear regulatory and financial terms, the strength of their case.” To this end, a multinational firm showing wide and depth geographical network coverage makes life easier for these companies as they can put together a strong team quickly and efficiently, duly reinforced by necessary experts.

Bernad and his forensic team assist clients acting as expert witnesses and, among many others, assessing the true value of investments, plus, of course, actual or potential loss of profits, loss investments and other types of economic damages. He has seen rising commercial disputes, as well as investment arbitrations, focusing on long-term contracts, such as off-take or exploration agreement for oil and gas projects. “The current economic environment means that businesses don’t want long, costly court proceedings and there is an increasing desire to reach early settlements in disputes.”

It is no surprise that they are increasingly advising on arbitrations or when parties are seeking settlement, providing the so-called ‘early case assessment’. Bernad, was in fact recently appointed by the ICC as Vice Chairman of the Centre of Expertise – the first Spanish Expert to be recognised in this role – while both Sole and himself are regular expert witnesses during major international arbitrations.

The increasing complexity of cases is putting further scrutiny on this role, explains Bernad. “Credibility and independence are required, plus the skills to give evidence in such a way as to ensure any message is delivered accurately.”

Managing disputes in Latin America

Pablo Bernad

Carlos Solé

El desarrollo de un negocio en Lationamérica puede

ser muy satisfactorio aunque, como en

muchas jurisdicciones, cuando hay múltiples

partes y estructuras contractuales complejas,

se presentan retos que deben ser cautelosamente

diagnosticados y gestionados, dicen Pablo Bernad y Carlos Solé de

KPMG Forensic.

Page 8: Energy & Renewables Report

• IBERIAN LAWYER • November / December 2012 www.iberianlawyer.com46

EnERgy & REnEwablEs REpoRt

Energising AfricaEnergy companies have a firm focus on the rich natural resources of Angola and Mozambique. But the countries’ legal and economic systems are presenting some unique challenges for investors.

The current appetite for oil and gas and mining projects in Africa is extraordinary, says António Vicente Marques, Founding Partner at AVM Advogados, an Angolan law firm. “Many businesses that have not dealt with places such as Angola and Mozambique now want to establish a local practice.”

In the case of Mozambique, liquefied natural gas (LNG) has been the priority for the Government. Leading energy companies, such as Eni and Anadarko, have been the early movers and have invested heavily in exploration and discovery of gas reserves during recent years. The anticipation, adds Claudia Santos Cruz, AVM’s Lisbon Managing Partner, is that these companies will be able to complete projects and begin exporting LNG within the next five years.

In the case of Anadarko, it is developing an $18bn LNG project that is intended to sell LNG to Asia. Eni’s multi-billion dollar project is due for a final investment decision next year. The Government has estimated that, generally, the level of LNG investment could reach up to $50bn over the next 10 years

Also, the banking industry in Africa has been improving and the expectation is that capital will be required, says Vicente Marques. “Many South African, Portuguese and British banks have ventured into Lusophone Africa and the demand for energy – especially from jurisdictions such as Japan that closed its nuclear power stations following the 2011 tsunami – means strong offtake agreements are likely.”

African countries, of course, present certain unique issues to deal with. Mozambique has seen a civil unrest over the past 18 months; while the Angolan capital Luanda has been regularly named the most expensive city in the world.

Such political and economic risks tend to be factored into most projects and Santos Cruz says that the local laws remain the biggest challenge to investment. “While the legislation has been improved – Mozambique for example has legislation in English, which is important for international contracts – reforms are on-going and that may encourage investment in the future.”

Santos Cruz points to issues regarding

taxation of oil companies as well as restrictions on business operations. For instance, recent changes in both Angola and Mozambique largely require that international investors enter into contracts with local companies and almost all the proceeds from projects need to pass through the local banking system. Likewise, the Angolan government expects that 70 percent of the labour force on any projects is drawn from the local market. In Mozambique, that amount rises to 90 percent – depending upon the total staff.

Such requirements to use a certain percentage of domestic labour can be problematic, because industries like oil and gas or mining demand very highly skilled workers and there may not be enough of those in the local market, says Vicente Marques. “Foreign workers too often find that securing a work visa can be a long process.”

Furthermore, many African countries require that foreign firms enter into a joint venture with local companies for projects. The local legislation states that the local entity must hold 51 percent of the joint business, theoretically making the foreign firm a minority stakeholder, although contractual provisions usually help avoid complications.

Those companies operating in the region also have new reforms to contend with. Oil, for instance, is priced in US dollars and Angola’s rich resources have resulted in a dual-currency market, with US dollars used alongside the local kwanza. As of October 2012, all payments to local oil and gas operators in Angola must be made through a local bank account and, from July 2013, payments will need to be made in kwanzas.

“These are not the only challenges for investors,” Santos Cruz explains. “Foreign technical assistance oil and gas contracts now need to be checked by various State bodies – such as the Ministry of Economy and the Central Bank – and this can be a time-consuming process.”

Vicente Marques expects the interest in Africa to remain strong from Portuguese, Brazilian, Chinese and other international investors. And other than Angola, he predicts new activity in other former Portuguese jurisdictions, such as Macau and East Timor, as the next step in the growth of the energy markets.

El interés por proyectos de energía y minas en Africa es excepcional, por lo que las empresas tienen su mirada puesta en los recursos naturales del país, dicen António Vicente Marques y Claudia Santos Cruz de AVM Advogados. Sin embargo, los sistemas jurídicos y económicos todavía presentan ciertos obstáculos.

António Vicente Marques

Claudia Santos Cruz

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November / December 2012 • IBERIAN LAWYER • www.iberianlawyer.com 47

GUIDE TO LEADING LAWYERSEnERgy & REnEwablEs REpoRt

Sponsored section: A selection of law firms recommended within the internationally recognised directories and / or by clients.

Ana Oliveira Rocha, PLMJ Law Firm

Address: Av. Da Liberdade, nº 224, Edifício Eurolex, 1250–148 LisboaTel: + 351 213 197 371 Fax: + 351 213 197 337Email: [email protected] Web: www.plmj.ptMain practice areas: Natural Resources, Oil & Gas, Renewables, Energy

Antonio García Muñoz, Lener

Address: Paseo de la Castellana 23, 28046 MadridTel: + 34 91 391 20 66 Fax: + 34 91 310 22 22Email: [email protected] Web: www.lener.esMain practice areas: Administrative Law, Environmental, Natural Resources, Regulatory, Renewables

Carla Martins Branco, pbbr - Pedro Pinto, Bessa Monteiro, Reis, Branco, Alexandre Jardim & Associados – Sociedade de Advogados

Address: Avenida da Liberdade 110, 6º, 1250-146 LisbonTel: + 351 21 326 47 47 Fax: + 351 21 326 47 57Email: [email protected] Web: www.pbbr.pt Main practice areas: Environmental, Renewables, Electricity, Oil & Gas, Corporate and M&A

Bruno Azevedo Rodrigues, ABBC

Address: Largo de São carlos, nº 3, 1200–410 LisbonTel: + 351 21 358 36 20 Fax: + 351 21 315 94 34Email: [email protected] Web: www.abbc.pt Main practice areas: Banking & Finance, Energy & Renewables, M&A, Natural Resources, Offshore, Oil & Gas, Private Equity, Projects & Infrastructure, Venture Capital, Foreign Investment in Africa

Bernardo Diniz de Ayala, Uría Menéndez - Proença de Carvalho

Address: Edifício Rodrigo Uría, Rua Duque de Palmela 23, 1250-097 LisbonTel: + 351 21 030 86 13 Fax: + 351 21 030 86 01Email: [email protected] Web: www.uria.com Main practice areas: Administrative Law, Project Finance and Energy & Environmental Law

António Vicente Marqués, AVM Advogados

Address: R. Carlos Alberto da Mota Pinto, 17 A, Amoreiras Square, 8ºB, 1070-313 LisbonTel: + 351 30 450 10 10 Fax: + 351 30 450 10 09Email: [email protected] Web: www.avm-advogados.com Main practice areas: Public Law, Custom Law, Oil & Gas, Telecommunications, Banking & Finance, Litigation & Arbitration, Renewables, Electricity, Tax, Capital Markets

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GUIDE TO LEADING LAWYERSEnERgy & REnEwablEs REpoRt

Sponsored section: A selection of law firms recommended within the internationally recognised directories and / or by clients.

Carlos Vázquez, Gómez-Acebo & Pombo

Address: Paseo de la Castellana 216, 28046 MadridTel: + 34 91 582 91 00 Fax: + 34 91 582 91 14Email: [email protected] Web: www.gomezacebo-pombo.comMain practice areas: Public Law in General and, in particular, Waters, Residues, Energy, Environment, Administrative HR and Tax Law

Francisco Solchaga, Araoz & Rueda Address: Paseo de la Castellana 164, 28036 MadridTel: + 34 91 319 02 33 Fax: + 34 91 319 13 50Email: [email protected] Web: www.araozyrueda.com Main practice areas: Energy Law, Corporate / M&A and Securities

Gonzalo Olivera, SJ Berwin SA

Address: Calle Claudio Coello 37, 1st floor, 28001 MadridTel: +34 91 426 00 50 Fax: +34 91 426 00 66Email: [email protected] Web: www.sjberwin.comMain practice areas: Enviromental, Natural Resources, Oil & Gas, Regulatory, Renewables, Electricity, Offshore, Projects & Infrastructure

Covadonga del Pozo, Del Pozo & De la Cuadra

Address: Hermosilla 49, 28001 Madrid Tel: + 34 91 575 78 17 Fax: + 34 91 431 31 58Email: [email protected] Web: www.dpdc.esMain practice areas: Environmental, Natural Resources, Oil & Gas, Renewables, Electricity, Offshore, Administrative Law

Javier Santos, DLA Piper Address: Paseo de la Castellana 35, 28046 Madrid Tel: + 34 91 319 12 12 Fax: + 34 91 578 26 88 Email: [email protected] Web: www.dlapiper.com Main practice areas: Natural Resources, Oil & Gas, Banking & Finance, Litigation & Arbitration, Renewables, Electricity, Projects & Infrastructure

João Nuno Barrocas, Barrocas Advogados

Address: Amoreiras, Torre 2, 15º A, 1070-274, LisbonTel: + 351 21 384 33 00 Fax: + 351 21 387 02 65Email: [email protected] Web: www.barrocas.pt Main practice areas: Natural Resources, Oil & Gas

Hermenegildo Altozano, Bird & Bird

Address: Jorge Juan 8, 1º, 28001 MadridTel: + 34 91 790 60 00 Fax: + 34 91 790 60 11Email: [email protected] Web: www.twobirds.com Main practice areas: Energy and Natural Resources

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GUIDE TO LEADING LAWYERSEnERgy & REnEwablEs REpoRt

Sponsored section: A selection of law firms recommended within the internationally recognised directories and / or by clients.

José Eduardo Martins, Abreu Advogados Address: Avenida das Forças Armadas 125, 12º, 1600-079 LisbonTel: + 351 21 723 18 00 Fax: + 351 21 723 18 99Email: [email protected] Web: www.abreuadvogados.com Main practice areas: Administrative & Public Law, Electricity & Gas, Environmental, Projects & Infrastructure, Renewables and Public Procurement

José Luís Esquível, Esquível Advogados

Adress: Avenida António Augusto de Aguiar, n.º 5, 2º B, 1050-010 Lisbon Tel: + 351 21 384 53 10 Fax: + 351 21 384 53 19Email: [email protected] Web: www.esquivel.com.ptMain practice areas: Administrative & Public Law, Project Finance & Infrastructure, Dispute Resolution, Energy & Utilities and Environmental

Manuel de Andrade Neves, Abreu Advogados Address: Avenida das Forças Armadas 125, 12º, 1600-079 LisbonTel: + 351 21 723 18 00 Fax: + 351 21 723 18 99Email: [email protected] Web: www.abreuadvogados.com Main practice areas: Administrative & Public Law, Electricity & Gas, Environmental, Projects & Infrastructure, Renewables and Public Procurement

Juan Ignacio González Ruiz, Uría Menéndez

Address: Príncipe de Vergara 187, Plaza de Rodrigo Uría, 28002 MadridTel: + 34 91 586 03 81 Fax: + 34 91 586 04 84Email: [email protected] Web: www.uria.com Main practice areas: Energy, Project Finance and Banking & Finance

Juan Rodríguez Cárcamo, PEREZ-LLORCA

Address: Alcalá 61, 28014 MadridTel: + 34 91 436 04 32 Fax: + 34 91 436 04 30Email: [email protected] Web: www.perezllorca.comMain practice areas: Administrative Law, Regulatory, Renewables, Projects & Infrastructure

Lino Torgal, Sérvulo & Associados

Address: Rua Garrett 64, 1200-204 LisbonTel: + 351 21 093 30 00 Fax: + 351 21 093 30 01/2Email: [email protected] Web: www.servulo.com Main practice areas: Administrative Law, Regulatory, Renewables, Electricity, Projects & Infrastructure

Luis Pérez de Ayala, Cuatrecasas, Gonçalves Pereira

Address: Almagro, 9. 28010 MadridTel: + 34 91 524 79 48 Fax: + 34 91 524 71 24Email: [email protected] Web: www.cuatrecasas.comMain practice areas: Administrative Law, Environmental, Regulatory, Renewables, Electricity, Public Law, Middle East Deck

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EnERgy & REnEwablEs REpoRtGUIDE TO LEADING LAWYERS

Sponsored section: A selection of law firms recommended within the internationally recognised directories and / or by clients.

Manuel Santos Vítor, PLMJ Law Firm

Address: Av. Da Liberdade, nº 224, Edifício Eurolex, 1250–148 LisboaTel: + 351 213 197 371 Fax: + 351 213 197 337Email: [email protected] Web: www.plmj.ptMain practice areas: Natural Resources, Oil & Gas, Renewables, Energy, M&A

Vanda Cascão, Vieira de Almeida & Associados

Address: Avenida Duarte Pacheco 26, 1070-110 LisbonTel: + 351 21 311 34 00 Fax: + 351 21 311 34 06Email: [email protected] Web: www.vda.pt Main practice areas: Projects & Infrastructure, Energy & Natural Resources

Miguel Lorena Brito, F. Castelo Branco & Associados

Address: Avenida da Liberdade, 249 – 1º, 1250-143 LisboaTel: + 351 21 358 75 00 Fax: + 351 21 358 75 01Email: [email protected] Web: www.fcblegal.comMain practice areas: Administrative, Environmental, Infrastructure & Projects, Property, Construction & RE

Rafael Audivert Arau, Roca Junyent Address: Aribau 198, 08036 BarcelonaTel: + 34 93 241 92 00 Fax: + 34 93 414 50 30Email: [email protected] Web: www.rocajunyent.com Main practice areas: Administrative and Contentious-Administrative Litigation, Energy, Environmental Law, Health and Food Law and Urban Planning

Nelson Raposo Bernardo, Raposo Bernardo

Address: Avenida Fontes Pereira de Melo, Edificio Aviz 35, 18º, 1050-118 LisbonTel: + 351 21 312 13 30 Fax: + 351 21 356 29 08Email: [email protected] Web: www.raposobernardo.com Main practice areas: Banking & Finance, Capital Markets, Corporate, M&A, Project Finance, Private Equity, Venture Capital, Projects & Energy

Monica Carneiro Pacheco, CMS Rui Pena Arnaut

Address: Rua Sousa Martins, 10, 1050-218 LisbonTel: + 351 21 095 81 36 Fax: + 351 21 095 81 55Email: [email protected] Web: www.cms-rpa.com Main practice areas: Public Law, Energy Law and Project Finance

Manuel Protásio, Vieira de Almeida & Associados

Address: Avenida Duarte Pacheco 26, 1070-110 LisbonTel: + 351 21 311 34 00 Fax: + 351 21 311 34 06Email: [email protected] Web: www.vda.pt Main practice areas: Projects & Infrastructure, Energy & Natural Resources, Corporate, M&A

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November / December 2012 • IBERIAN LAWYER • www.iberianlawyer.com

IBERIAN LAWYER

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