Fermaca closes El Encino - La Laguna gas pipeline

Fermaca Global LP. has closed financing for the US$820 million build-out of the El Encino – La Laguna natural gas pipeline project in Mexico.Project financing has been provided by Citigroup, ING, NordLB, Banco Santander, Sabadell and Goldman Sachs. 

The La Laguna Pipeline project, stretching for 465 km between El Encino in the state of Chihuahua and La Laguna in Durango, will connect a pair of power plants owned by Comisión Federal de Electricidad (CFE), Mexico’s state-owned electric company.  The project is especially noteworthy because it will carry natural gas originating from Texas and supply power plants in northern Mexico with an alternative energy source to fuel oil.

Financing will go towards design, construction and operation of the La Laguna Pipeline, which is being developed by Fermaca Pipeline El Encino Holdings, a subsidiary of Fermaca Global LP.  The pipeline, which will have a transportation capacity of 1,500 MMscfd, is expected to be operational in the first half of 2017.

Milbank, Tweed, Hadley & McCloy LLP has represented the joint lead arrangers. Milbank partner Dan Bartfeld, who heads the firm’s Global Project Finance group, commented:

“We’re pleased to once again have worked with world-class financial institutions in bringing a large financing together to advance a major pipeline project in Mexico that originates with natural gas supplies in the US.”

“Mexico continues to make major strides in its energy infrastructure and the La Laguna Pipeline promises to help bring energy to the northern part of the country, and we are thrilled to again be part of a financing by Fermaca.”

This gas pipeline will be connected to the gas pipeline from Ojinaga to El Encino, which was awarded on 24 November 2014 to IEnova, a subsidiary of Sempra,