Financial close announced for gas pipeline project in Mexico

A group of major international lenders have provided financing for the construction of a natural gas pipeline between the states of Durango and Aguascalientes in Mexico.

The joint lead arrangers are ING, Nord/LB, Banco Santander, Banco Sabadell, Mizuho Bank, Natixis, Banca Intesa, KfW, and BNP Paribas with a team led by Global Project, Energy and Infrastructure Finance practice leader Daniel Bartfeld and associates Michael Evry and Caylee Hong. Milbank, Tweed, Hadley & McCloy LLP advised the group.

The pipeline, which is being developed by Mexico’s energy infrastructure company Fermaca, will run north-south approximately 450 kilometers (280 miles) from La Laguna hub in Durango to a pair of power stations in Aguascalientes owned by Comisión Federal de Electricidad (CFE), Mexico’s state-owned electric company, and also connect to a pipeline extending from the state of Jalisco through Aguascalientes to the state of San Luis Potosí.

The project continues the 465-kilometer pipeline from the northern state of Chihuahua to Durango for which Milbank advised on US$820 million financing in 2015. The conduit carries natural gas originating in Texas to northern Mexico power plants, providing an alternative to fuel oil.

Mr. Bartfeld, who has spearheaded Milbank’s role in previous and ongoing financings related to pipelines between the US and Mexico, said:

“We’re pleased to once again work with world-class financial institutions on a financing by Fermaca to bolster Mexico’s energy infrastructure and provide a market for U.S. natural gas supplies.”