Sempra Pipelines & Storage, a unit of Sempra Energy, has said that it will acquire the Mexican pipeline and gas infrastructure assets of El Paso for $300m. The acquisition involves El Paso's wholly owned natural gas pipeline and compression assets in the Mexican border state of Sonora.
The transaction also includes El Paso’s 50% interest in a joint venture with Pemex, a Mexican state-owned oil company. The joint venture operates two natural gas pipelines and a propane system in northern Mexico.
George Liparidis, president and chief executive officer of Sempra Pipelines & Storage, said: “This acquisition expands our scale and geographic footprint in one of the strongest growth regions in Mexico, while providing entry into the emerging propane pipeline business.
“These pipeline assets are backed almost entirely by long-term contracts and have a history of delivering solid, predictable revenue streams; allowing us to build a stronger platform for growth in the country.”
The company said that the pipeline and natural gas infrastructure assets being acquired are supported by customer contracts with an average duration of 13 years. The acquisition is expected to be accretive to Sempra Energy’s earnings by $0.05 in 2010 and $0.1 in 2011.
Sempra Pipelines & Storage will acquire El Paso’s seven-mile Agua Prieta natural gas pipeline and Naco compressor station in Sonora, which facilitates the delivery of natural gas from the US border to a Mexico power plant that provides electricity to the Comisi n Federal de Electricidad, the country’s state-owned electric utility.
The joint venture with Pemex owns and operates: the 23-mile, 24-inch Samalayuca natural gas pipeline and Gloria a Dios compressor station in Chihuahua that supply natural gas from the US to various Mexican power plants; the 70-mile, 36-inch San Fernando natural gas pipeline in the state of Tamaulipas; and the 114-mile, 12-inch pipeline that transports liquid propane from the Burgos production area to a delivery facility near the city of Monterrey.
The company added that subject to approvals by lenders and Mexican regulatory authorities, the transaction is expected to be completed in the second quarter 2010.
Sempra Pipelines & Storage currently owns several Mexico-based assets, including pipelines in Baja California connecting Sempra LNG’s liquefied natural gas receipt terminal near Ensenada with various power plants in the region, as well as pipeline systems in the US. The current assets also include Ecogas Mexico.