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IEnova’s $500M Los Ramones II Pipeline Deal Receives Mexico Competition Regulator Green Light

Mexican competition authorities have cleared a $500 million deal by Sempra Energy’s local subsidiary to increase its stake in the Los Ramones II Norte natural gas pipeline, the company said last week.

Infraestructura Energetica Nova (IEnova) said Friday the Comision Federal de Competencia Economica (Cofece) had approved its acquisition of an additional 25% stake in the pipeline from Petroleos Mexicanos (Pemex) for $231 million and assuming $289 million in debt.

The transaction increases IEnova’s indirect stake in Los Ramones II Norte to 50%. The company expects to close the deal, announced in October, in “the coming days, before the year’s end.”

The sale is part of a Pemex strategy to offload assets in nonstrategic sectors, such as midstream natural gas, to focus on its core business of exploration and production. The state oil company is retaining a 5% stake in Los Ramones II Norte, with the balance held by First Reserve Corp. and Blackrock Inc.

Los Ramones II Norte has 1.42 Bcf/d of capacity and two compressor stations. The middle segment of the Ramones pipeline in northeast Mexico interconnects with Los Ramones I in Nuevo Leon state and Los Ramones II Sur downstream in San Luis Potosi.

IEnova, which developed Los Ramones I and Los Ramones II Norte in a joint venture (JV) with Pemex, put the first segment into service in December 2014 with the second in February 2016.  France’s Engie SA, also in partnership with Pemex, built Los Ramones II Sur, which it commissioned at the end of 2016.

In 2016, IEnova bought out Pemex’s half-stake in the JV, Gasoductos de Chihuahua, for $1.14 billion. The deal at the time included a liquefied petroleum gas transport system and the Ramones I, Samalayuca, San Fernando natural gas pipelines, but it excluded the Ramones II stake in the present transaction.

The entire Ramones system extends about 530 miles from the South Texas border to Guanajuato state in central Mexico. It transports natural gas imports from the 2.1 Bcf/d NET Mexico pipeline, which terminates near Rio Grande, TX.

The Los Ramones segments are three of the six private pipelines that are part of Mexico’s main natural gas transport network, the Sistrangas. Ramones was the most sought after injection point in the first open season by Sistrangas held earlier this year, accounting for nearly half of the 2.2 Bcf/d in firm capacity awarded throughout the system.

IEnova this year has completed several pipelines in northwest Mexico, all outside of the Sistrangas. The projects are anchored by long-term transport agreements with the federal power company, the Comision Federal de Electricidad, to supply fuel to several combined-cycle plants in the region.

IEnova is also building the 2.6 Bcf/d Sur de Texas-Tuxpan marine pipeline in a JV with TransCanada Corp. The $2.1 billion project extends from the maritime border near Brownsville, TX, and terminates at the Port of Tuxpan in Veracruz state.

IEnova reported a 3Q2017 net profit of $127 million (8.3 cents/share), up 127% compared with $56 million (4.7 cents) in 3Q2016.

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