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Pemex, First Reserve to Invest $1B in Energy Infrastructure Across Mexico

Mexico's Petroleos Mexicanos (Pemex) and private equity (PE) giant First Reserve are partnering in a $1 billion venture to build energy infrastructure across the country.

The joint venture represents "a statement of foreign confidence in the Mexican energy industry," according to First Reserve, which focuses exclusively on energy investments.

"As global investors, First Reserve is excited to be expanding our existing portfolio in Mexico, where we have believed there to be attractive investment opportunities for some time," said First Reserve Co-CEO William Macaulay. "Through formal collaboration with Pemex, we feel we have gained substantial access to a region with strong supportive macro dynamics alongside a motivated and accomplished partner."

Pemex began to draw a lot of outside investments last year when a comprehensive energy reform package was instituted for the state-owned oil and gas company. Last month First Reserve and Blackrock agreed to invest in the Pemex-led Los Ramones Pipeline Project, which will carry U.S. gas south (see Daily GPI, March 27).

Sempra Energy, already a longtime investor in the country through subsidiary IEnova, also continues to invest, despite the global oil price crash (see Daily GPI, March 3). IEnova now is listed on the Mexican Stock Exchange following a $600 million initial public offering.

IEnova is working on three Mexican natural gas pipeline projects, including the Sonora Pipeline in the western south of Arizona and the Los Ramones project in the northeast part of Mexico that runs south of Texas. Combined, the two pipelines would provide more than 3 Bcf/d of import capacity.

Before the oil price downturn, oilfield service companies, including Halliburton Co., also were reporting substantial growth in their Latin American business units, primarily because of Pemex reforms (see Daily GPI, Oct. 20, 2014). In addition, Pemex has allied with Mercuria and JP Morgan to import U.S. gas (see Daily GPI, Aug. 1, 2014).

Mexico's power company, Comision Federal de Electricidad, has signaled that it has four other pipeline projects planned worth an estimated $1.8 billion, and Sempra may attempt to bid on more projects. "It is not how many we get, it is how profitable they are," CEO Debra Reed said in March. "We feel we have great opportunities in Mexico to raise capital, but we also would like partners that would bring something strategic to the table that would make Sempra more competitive.”

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