La Laguna pipeline: financing news

Milbank has represented lenders in a financing package for the build-out of an US$820 million new natural gas pipeline that will run for 289 miles between El Encino in Chihuahua and La Laguna in Durango.

The La Laguna Pipeline will connect a pair of power plants owned by Mexico’s state-owned electric company; it is expected to be operational in the first half of 2017.? ?

Notably, the pipeline, which will service energy needs in Northern Mexico, will deliver natural gas originating in Texas, part of a growing transmission of US gas supplies south of the border.?

The Laguna project is the latest US-Mexico pipeline financing handled by Milbank – the firm has advised lenders in two other transmission pipelines delivering US natural gas to points in Mexico.? ?

La Laguna pipeline

The La Laguna Pipeline project, stretching for 465 km (289 miles) 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 Mexico’s leading energy infrastructure company Fermaca Global LP.

The pipeline, which will have a transportation capacity of 1500 million ft3/d, is expected to be operational in the first half of 2017.? ?

Milbank’s experience with US-Mexico deals

The La Laguna Pipeline project is the latest major US-Mexico pipeline financing handled by Milbank.

In recent years, the firm represented lenders in funding the construction of the 120 mile Agua Dulce natural gas pipeline from Texas to Mexico, and also a 237 mile natural gas transmission pipeline with an interconnection point at the US/Mexico border in the Mexican state of Chihuahua.? ?

The joint lead arrangers represented by Milbank consisted of Citigroup, ING, NordLB, Banco Santander, Sabadell and Goldman Sachs.?“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,” said Milbank Partner Dan Bartfeld, who heads the firm’s Global Project Finance group.? ?

“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,” added Mr. Bartfeld, who had also led the team in the Agua Dulce financing, Chihuahua Pipeline financing and other ongoing pipeline projects in the US that will connect to the Mexican border.? ?

Edited from source by Elizabeth Corner

Published on 31/07/2015

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