The Pipelines are Coming?

Milbank, Tweed, Hadley & McCloy has advised an international bank syndicate in the more than USD1.1 billion limited recourse project financing for a pair of natural gas pipelines that will run from a hub in southwest Texas to locations on the US/Mexico border.

Pair of pipelines to carry natural gas from southwest Texas hub

Pair of pipelines to carry natural gas from southwest Texas hub

The financing comprises two greenfield projects through two separate financings that have closed and funded concurrently: an approximately USD508 million pipeline running 195 miles to San Elizario, Texas, near El Paso; and an approximately USD647 million pipeline that will run 148 miles to Presidio, Texas, on the Rio Grande River about 180 miles southeast of San Elizario. The 42-inch pipelines will both originate at the Waha energy storage and transit hub west of Odessa, Texas.

The borrower/developer is a consortium consisting of Mexico’s Carso Energy SA de CV, Energy Transfer Partners of Texas, and MasTec. of Florida, and gas will be sold via offtake agreements with the Mexican state-owned electric utility, Comisión Federal de Electricidad (CFE).

Global Project Finance partners Dan Bartfeld and Daniel Michalchuk led the Milbank team on behalf of the lenders, including The Bank of Tokyo Mitsubishi/MUFG, Sumitomo Mitsui Banking Corp. (SMBC), BBVA Bancomer and Mizuho Bank.

“US natural gas supplies make it a natural provider for Mexico’s electrical utility, which needs reliable sources to fuel its growth,” Michalchuk said. “Milbank is happy to play a role in helping facilitate financing for projects that are mutually beneficial to neighbours on either side of the Rio Grande.”

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