BlackRock And First Reserve To Acquire Equity Stakes In Mexican Pipelines

(RTTNews) - BlackRock, Inc. (BLK) and First Reserve reached a definitive agreement with P.M.I., a wholly owned subsidiary of Petroleos Mexicanos or "PEMEX", to acquire approximately forty-five percent 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 744km of natural gas pipelines which will serve as critical energy infrastructure and is part of a broader initiative to transport abundant, natural gas from the Eagle Ford shale 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. BlackRock Infrastructure currently manages over $6 billion of invested and committed assets globally.

The investment will expand First Reserve's existing Mexican infrastructure investment footprint. First Reserve is the largest global private equity and infrastructure investment firm exclusively focused on energy with over $4 billion dedicated to energy infrastructure opportunities worldwide.

CEO of Pemex, Emilio Lozoya, noted that with this investment by two reputable financial firms, the Energy Reform becomes a step closer to materializing into an economic driver for the country. He also mentioned that this project shows that international investors have confidence that the changes propelled by President Enrique Pena Nieto are delivering benefits to the Mexican people.

Both Projects will benefit from a 25 year take-or-pay Transport Services Agreement with Pemex Gas y Petroquímica Básica. 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.