BlackRock, First Reserve to acquire equity stakes in Pemex pipeline projects

BlackRock and First Reserve have entered into a definitive agreement with PMI, a wholly owned subsidiary of Petróleos Mexicanos (Pemex), to acquire approximately 45% equity interest in two natural gas pipelines, Los Ramones Phase II North and Los Ramones Phase II South.

Upon closing, these will be the first major Pemex-sponsored midstream assets to be built in partnership with foreign capital since the approval of Mexico’s historic Constitutional Energy Reform in 2013.

The Los Ramones II projects consist of the construction and operation of 744 kilometers of natural gas pipelines that will serve as critical energy infrastructure and are part of a broader initiative to transport natural gas from the Eagle Ford shale play in south Texas to meet central Mexico’s growing demand for natural gas. Construction of the projects began in 2014, with full commercial operations expected in mid-2016.

This transaction represents the first infrastructure investment for BlackRock in Mexico. BlackRock intends to establish a local infrastructure investment platform in Mexico, leveraging its global infrastructure investing capabilities and its existing Latin American business. The investment will expand First Reserve’s existing Mexican infrastructure investment footprint.

Both projects will benefit from a 25-year take-or-pay transport services agreement (TSA) with Pemex Gas y Petroquímica Básica (PGPB). Transaction closing is contingent upon required anti-trust and other regulatory approvals.

BNP Paribas and Santander acted as advisors to the syndicate of banks providing project finance to Los Ramones Phase II South. Santander also acted as underwriter for debt financing of 80% of construction costs in Los Ramones Phase II North.

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