BlackRock, First Reserve to buy stakes in two Mexican pipelines

BlackRock and First Reserve have agreed to acquire about 45% stake in two Mexican natural gas pipelines, owned by state-owned oil company Petroleos Mexicanos (Pemex).

The 744km of pipelines, Los Ramones Phase II North and Los Ramones Phase II South, are expected to be operational by mid-2016.

The pipelines will serve the Eagle Ford shale in South Texas to meet central Mexico’s increasing demand for natural gas.

The deal marks the first major midstream agreement sponsored by Pemex with foreign capital since the approval of Mexico’s Constitutional Energy Reform in 2013.

It is also the first infrastructure investment in Mexico for the US-based BlackRock, which is planning to set up a local infrastructure investment platform in the country.

The investment will expand First Reserve’s existing infrastructure investment footprint in Mexico.

Pemex CEO Emilio Lozoya said with this investment by two reputable financial firms, the Energy Reform becomes a step closer to materializing into an economic driver for the country.

BlackRock Infrastructure Investment Group global head Jim Barry said: "Private sector participation in infrastructure is going to be crucial in Mexico and around the globe – I’m excited about prospects in Mexico for BlackRock and our clients, and we are pleased to partner with PEMEX on these initial projects."

First Reserve chairman and co-CEO William Macaulay said: "We are supportive of the Mexican government’s focus on energy reforms and believe the Los Ramones projects will be a cornerstone to these efforts."