Cross-border team advises APICORP on MENA’s first Islamic facility for voluntary carbon offsets

Global law firm Norton Rose Fulbright has advised The Arab Petroleum Investments Corporation (APICORP) on the MENA region’s first Islamic facility for voluntary carbon offsets.

APICORP, an energy-focused multilateral development financial institution, has signed a US $75 million Murabaha agreement in favour of Hartree Partners Power & Gas Company (UK) Limited, an affiliate of global energy and commodities firm Hartree Partners LP.

The facility will fund high quality voluntary carbon offsets, in support of the global energy transition and net zero emission goal. Each carbon offset represents the ownership of one ton of carbon dioxide equivalent (CO2e), which offsets corresponding emissions by the holder.  

The facility is designed with a syndication feature to allow additional banks to join in the future and gain access to this young asset class.

Voluntary carbon markets, where carbon credits are purchased voluntarily, support efforts by many governments and corporations to decarbonize their footprints, as part of global efforts to reduce emissions. APICORP’s facility will fund carbon offsets that are registered with the non-profit platform Verra, the largest global registry for nature-based offsets.

Norton Rose Fulbright partner Robin Balmer, who led the Dubai team advising on the deal, said:

“We were pleased to advise APICORP on this innovative Murabaha financing. The transaction demonstrates APICORP’s commitment to the energy transition through its pioneering efforts in offering facilities that help businesses to reach their sustainability targets.” 

“Working as a global team on this cross-border transaction, we were able to leverage our strong regional and international capabilities to assist APICORP with a complex and specialist form of financing.” 

The Norton Rose Fulbright team also included partner Catherine Hagerty in San Francisco, associate Amnah AlYousif in Dubai and paralegal Jordan Fry in Dubai.

Norton Rose Fulbright has strong track record of working on ESG-related financing in the Middle East. It recently advised HSBC and a number of other financial institutions on the largest Shariah-compliant syndication, based on ESG and Green Loan Principles, in the Middle East. In July 2022, it also advised on a world-first US$1.1 billion sustainability-linked, dual-tranche murabaha financing to a financial institution.