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After a somewhat depressing period from 2009 through 2010, project finance is showing some signs of life in Russia, with flickers of interest becoming more apparent and new areas for financing opening up.

"The market has never been so good for us. It is the busiest I remember for about five years," comments one enthusiastic partner. Others are not quite as optimistic though: "It hasn't necessarily been the most active year for project finance," says another partner.

Despite the number of projects still being relatively low, this positive tint on things has filtered down, with a number of new and developing areas starting to provide mandates for firms. Particularly active is energy and power, traditionally strong in Russia but which is branching into new areas too, such as nuclear power.

"Nuclear power is an interesting question. There are definitely projects under discussion, based on a project finance structure. "It might not necessarily be this year, but next year this will be big." It is also the case that Russia has signed a MOU with Turkey to build a nuclear plant in the country, but fears brought into sharper focus by the terrible events at Fukushima have put the skids under the uptake of this type of power deal.

Another interesting trend in the energy market is the diversifying of investment in the oil industry, which has had a knock-on effect for project financing. Whereas in the past work went 'upstream', i.e. toward exploration and recovery of crude and gas, there is now a strategic push to engage with the 'downstream' aspect too, such as the actual refining and distribution. "Historically the work goes upstream, but we are now seeing investment downstream. The Russian government are looking to encourage investment downstream, to refine and keep the value in-country," explains one energy partner.

Traditional power work continues to be strong as well too, even if it is primarily domestic. "There is an increase in power jobs at the moment. It is mainly Russian players who want to restructure power development," comments one lawyer.

Another partner however contradicts this view, and states that the Brics countries, the emerging, thriving markets in Brazil, India, China and also South Africa now as well as Russia, are taking advantage of this network and collaborating on more deals. "We are also advising a Chinese player on power investment. There has been increased investment between Brics countries overall," notes one practitioner.

Continuing a trend first recognised last year, waste management, water and other specialist utilities are still projects that are drawing interest from investors, so says one partner: "Utilities is actually becoming a key sector, and will be a big part of Russian project finance for the future." Related to this, another partner adds: "There is a lot of hope for the future of Russian PPP (public-private partnership)."

The biggest news in the market has to be the new project finance law, a draft of which is said to be out before the Duma very soon. Partners are almost wholly united in their keenness on these new developments, which they see as essential if project finance is to have the legislative shackles taken off it and be allowed to thrive.

"The new law looks to make project finance more straightforward," says one partner, while another explains why the law has to be altered: "Coming from a common law jurisdiction it is strange as the legislation here is new and untested. You have to be careful as if it isn't obviously permitted you can have problems. There are concepts seen as usual in other countries that we'd like here too."

"One change will be the concessions legislation. It will make it easier to secure projects. It also brings in a lot of other important things, such as certain types of security for bank accounts related to projects," observes a partner, though some others do hedge their excitement a little: "It will bolster the laws, though we hope it doesn't bring more problems than it fixes." Another agrees with this cautious approach: "If the new project finance law comes in the form we want, it will be helpful. A lot of people are sceptical though."

Overall this new law does seem a positive move, especially in light of the global events requiring substantial infrastructural work that are coming to Russia in the next decade or so, as one partner explains: "If you read it you would be pleased, as it introduces a number of new things that are absent and should really be there. I think it passing will lead to a renaissance in project finance in Russia, something that will be necessary for the Winter Olympics [2014] and the World Cup [2018]."

There is a definite theme to Freshfields' project finance work when you ask the market where the firm's strengths lie. "Freshfields is very big on PPP (public-private partnership) and infrastructure," comments one peer, "They do mainly sponsored work and a lot of PPP projects," says another and a further partner adds: "Freshfields is big on PPP, they are known for it."

The team has built on last year's sizeable PPP deals by following up with some interesting mandates for this period too. One particularly noteworthy deal was the firm advising a public developer for St Petersburg with regard to the Orlovsky Tunnel project. This project represents a concession project for the construction of a turnpike whose route will push through under the Neva River. Practice head and leading lawyer Innokenty Ivanov leads on this deal, which agreed the concession in June 2010 but whose final completion date should be reached this year. The project represents a sizeable sum, said to be worth around $1.3 billion.

It is the case that St Petersburg provides a fruitful area for developments of this kind, with the PPP laws there rendering far more success to lawyers trying to get these projects through. Another project in the city that allowed Freshfields to showcase its PPP expertise was advising Vodokanal on the Neva Water project. This is a scheme put in place to help with the water supply, to be accomplished through a reconstruction of the Northern Water Treatment Plant. While the firm had experience in doing PPP through build-operate-transfer (BOT) lines, this deal is done slightly differently, on a build-own-operate-transfer (BOOT) basis under St Petersburg law.

The last 12 months for the projects team at Linklaters began with the return of finance specialist Matthew Keats, who took up the head of department role left by Daniel Tryer, who still continues to be involved here and there from the London office. Keats though has overseen a busy year flush with sizeable deals and it is this big ticket work and high visibility that keeps the firm in the top tier again.

"We see Linklaters a lot, all the time in fact," comments a rival partner.

Like many teams in Russia, Linklaters has found itself active on a number of energy related mandates. One big deal entailed Keats advising Gazprom Export on the ongoing Nord Stream Project. This was primarily rendering advice as regards the offshore and onshore long term gas transit arrangements for the project. A highly politicised deal, involving the upper echelons of the governments of Germany as well as Russia, the total value is approximately $12 billion and work is still live on the project.

Another fine deal that is representative of the team's work is a team, including Daniel Tryer, advising Total E&P Activités Petrolières on a pair of issues, including its 20% involvement with the large Yamal LNG (liquefied natural gas) project and participation in the Shtokman gas field and LNG project within Russia. The deal is highly complex due to the integration of both gas and LNG concerns and is currently still live. The project is expected to represent a value of $20-30 billion when it completes.

One smaller, though notable, deal was Linklaters advising the European Bank for Reconstruction and Development (EBRD), Sberbank, COFACE, ONDD, BNP Paribas, HSBC and ING as the lenders in connection with the €750 million financing of a new integrated petrochemical plant in Ksovo, Russia called RusVinyl. The deal is noteworthy due to its unique nature, being the first multi-sourced project financing in Russia since Sakhalin II Phase 2 and the first fully Russian greenfield project in the energy sector.

"We see White & Case from time to time but not too much," remarks one partner, reflecting the market opinion that the firm not been quite so visible this year, though the deep expertise of the team in Moscow, its status and the deals it has been working on are more than enough to keep it in the top tier here.

Partner Marc Polonsky, who divides his time between Russia and London, is one member of the team that comes in for praise from competitors: "He is brilliant, very calm and reasonable. He makes sure he takes care of his clients and there is no nervousness with him," comments a partner.

Clients too are impressed with the knowledge and skill of the team, as one comments: "We profoundly benefited from the team's project finance expertise. Their approach was a proactive one and they were also good at translating legal jargon to the layman. In fact, regarding commerciality they sometimes provided better advice than our financial advisor!"

The team's standout deal was led on by Irina Nesvetova, as White & Case acted for Nordstream on the project financing for their Baltic pipeline, the third-largest project finance deal in the world for 2010. The pipeline runs through the Baltic Sea from Russia through Finland, Sweden and Denmark before reaching Germany. The first phase completed last March for €3.9 billion, with the second phase closing in March 2011 for a figure of €2.5 billion.

As it is in other areas, so it is in project finance for A&O, who have had to weather some disruption this year with staff leaving, including a figurehead of the firm. Market opinion however is still consistent in saying that the firm remains a solid tier two proposition. "Allen & Overy is having real problems with staffing. Tony Humphrey retired and he was their project finance person on the ground," comments a partner on the loss of Humphrey, who ended his long-standing career in April 2011.

A leading lawyer and the firm's managing partner, Humphrey was universally acknowledged to have been a highly skilled lawyer in the Russian market, with a particular strength in projects work, and had over three decades of experience behind him. His loss is undoubtedly a blow for the team, though Edwin Tham has stepped up to assume the managing partner role.

Despite this big departure, the team there does still boast three respected partners, Anton Konnov, Andrei Baev and Elena Tchoubykina, who can welcome back senior associate Veronika Kondruseva from secondment this year, a lawyer with experience in Russian PPP (public-private partnership) projects.

As befits its status, the firm has still managed to be active on some important projects, including one that demonstrates the incipient trend of nuclear power. Andrei Baev and Gareth Price advised Atomstroyexport and INTER RAO UES, as well as Rosatrom and Atomenergoprom, with regard to a newly-minted nuclear power plant (NPP) in Turkey, namely the Akkuyu NPP.

Utilising its strength in energy, teams from A&O also advised Gazrpom on the South Stream gas pipeline, one of the most significant projects of the decade, and also render legal services to projects company Trans-Balkan Pipeline as to arrangements for the financing and building of the Burgas-Alexandroupolus cross-border oil pipeline. This work also involves follow-on work dealing with ports and oil storage infrastructure too.

The projects team at CC is a dynamic set of lawyers who are seemingly within a whisker of breaking into the top tier in this area, with the market keen to stress how increasingly active the firm has become. "CC doesn't really concentrate too much on this area but they have a lot of deals in the pipeline. They are close to going up a tier I think," comments one partner, while another is more certain: "Clifford Chance should be in the first category, they do a lot of work."

"Clifford Chance has a portfolio not exclusively, but a lot, made up of work for lenders, and not so much for Russian banks," observes another peer, giving a flavour of the team's work.

In terms of projects, the team's deal list seems to cut right across all the active areas of the moment. It is involved in infrastructure, advising the federal State Unitary Enterprise Dorogi Rossii (Russian Roads) in the construction and operation of a section of the Moscow to St Petersburg toll road and also with the airports, acting for German airport operator Fraport as lead operator in the joint venture with VTB Capital and the Copelouzos Group from Greece in the project to build and run a new passenger terminal at Pulkovo Airport. This was a PPP (public-private partnership) concession from St Petersburg.

CC has also tapped into the extremely active utilities sector, representing the winning consortium on a PPP scheme for the Yanino waste treatment facility, which will be built in the village of Yanino, which is located between Moscow and St Petersburg.

The firm is also actively engaged with a number of big names in the projects sector, including the EBRD (European Bank for Reconstruction & Development), the International Finance Corporation (IFC) and the Eurasian Development Bank.

In line with its elevation in the banking rankings the improved visibility and quality of the finance practice at Herbert Smith has impacted in project financing too, as peers overwhelmingly approve of the firm making the jump to tier two and possibly beyond. "Herbert Smith is doing well, they have a strong offering. We seem them more than most other firms. They are definitely one to watch," remarks a competitor. "Herbert Smith should definitely go up. They have been very active and are just much better than the other firms around them," agrees another partner, while a further peer adds: "Herbert Smith has definitely been more visible."

The team is led by finance partner Alexander Currie and he has put his energies into the team's biggest work this year. On this project his team advised Gazprom, and also its joint venture partners as sponsors, and the project company as the borrower with regard to a deal to finance the development of the Yuzhno-Russkoye gas field, located in Siberia. The deal was put in place with the first phase signed off in March 2011, and work continues on a project whose value could exceed €1 billion.

Herbert Smith was also involved in the Pulkovo International Airport project, one of the largest infrastructure deals to reach completion in Russia as well as the first of Russia's airport modernisation plans that has been done on a project finance basis. In this, banking partner Edward Baring advised UniCredit, which was acting as hedge provider. The sum value of the entire project comes to €1.2 billion, and the first part of this hedging closed out in December 2010.

CMS Russia wobbled slightly at the departure of Kirill Ratnikov in the preceding year but, as the market predicted, it didn't particularly affect the capabilities of the team, led by Jean Francois Marquaire and Stephen Cozens.

Having been engaged on a confidential warehousing deal, the firm also has continued to advise the North West Concession Company on the Moscow to St Petersburg toll road, a $2 billion deal that reached initial closing last year but which still requires work.

In addition, the firm also advised the European Bank for Reconstruction and Development (EBRD) as it extended a loan, denominated in Kazakh Tenge, to utilities company Aktau TSV&V, which works out of the city of Aktau, in Kazakhstan.

Gide Loyrette Nouel has responded well to losing projects partner Olga Revzina, who left at the end of August 2010. Her position was swiftly filled with the hire of Alexander Dolgov, a former senior associate at Allen & Overy who jumped ship to Gide to become a partner and head up the projects team in the Russian capital.

The team has worked closely with the International Finance Corporation (IFC) this year, concluding two very interesting deals. On one ongoing piece of work in mid-2011 it was acting for the IFC with regard to securing financing for a district heating company, backed by municipal guarantees from the Mytischi authorities, and on another in connection with financing for the construction of a logistics centre by Logopark Don, which closed in 2010. Dolgov took the lead on the Mytischi deal, with Grigory Marinichev active on the second deal.

"Gide does more original, local, non-Moscow work," comments one partner, and it would seem this is borne out by the mandates given above.

Norton Rose's projects team sees a lot of overlap with its respected banking team, and as such it will also benefit from the hire of partner Alexander Tsakoev, the finance specialist who joined from Herbert Smith in January 2011.

With a number of deals under confidentiality due to their ongoing nature, the firm did have one excellent representative deal to present. In this transaction London partner Madhayi Gosayi advised Horizon Air Investments, a subsidiary of the Copelouzous Group, as it formed a joint venture arrangement with VTB Bank and Fraport with regard to the Northern Capital Gateway special purpose vehicle, chosen by the St Petersburg government to develop, modernise and operate Pulkovo Airport through a public-private partnership (PPP) structure. The deal reached financial close, for a figure of $1.4 billion, in 2010, but post-transaction work is still ongoing with regard to the project.