Pemex to sell 45% stake in two Mexican gas pipelines

By MARY CHILDS
Bloomberg

BlackRock Inc., the world’s biggest money manager, and First Reserve Corp. are buying a stake in two natural gas pipelines owned by state oil company Petroleos Mexicanos.

BlackRock and First Reserve, the investment firm that has $4 billion devoted to energy infrastructure, are acquiring about a 45% equity interest in 744 kilometers (462 miles) of pipelines serving the Eagle Ford shale in South Texas, according to a statement from the companies.

Construction started last year and the projects, Los Ramones Phase II North and Los Ramones Phase II South, are expected to be operational by mid-2016. Terms weren’t disclosed.

The agreement marks the first major midstream deal sponsored by Pemex with foreign capital since Mexico’s 2013 legislation moving away from its history of state-owned monopolies. It’s also the initial infrastructure investment in Mexico for New York-based BlackRock, which is planning to start a dedicated local platform and set up a team in the country.

The asset manager is expanding debt and equity offerings targeting infrastructure projects as clients seek longer term investments at higher yields as interest rates hover near historic lows, CEO Laurence D. Fink said earlier this year.

“Mexico is our next big move,” said Jim Barry, the global head of BlackRock’s infrastructure investment group, which manages more than $6 billion. The “structural shifts” from reform are creating attractive investment opportunities, he said, so “we’re now in the Mexico infrastructure market forever.”

Industry Opening

Mexican President Enrique Pena Nieto enacted widespread energy industry changes in 2013, 75 years after the country’s oil and gas business was nationalized. The government projects that opening up the industry will generate $62.5 billion in investments by 2018.

BlackRock will look for investments in similar midstream oil and gas assets, as well as in transmission and distribution of electricity, water transport, toll roads, airports, ports and “social infrastructure” such as courthouses and hospitals, Barry said.

First Reserve, one of the oldest private-equity firms focused on energy, is based in Greenwich, Connecticut, and was founded in 1983.

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