First Reserve, Pemex in $1bn Mexico tie-up

The agreement comes one week after the buyout firm teamed up with BlackRock to invest $900m in natural gas pipelines belonging to a Pemex subsidiary.

First Reserve, a Connecticut-based private equity firm exclusively focused on the energy sector, and Pemex, Mexico’s state-owned oil and gas company, have teamed up to jointly invest $1 billion dollars in the country’s energy infrastructure sector, the two companies said in a statement on Tuesday.

The agreement comes just one week after First Reserve said it was partnering with asset manager BlackRock to acquire a 45 percent stake in the Los Ramones II projects – two natural gas pipelines belonging to a Pemex subsidiary – for $900 million. That transaction marked the first time a Pemex-sponsored midstream asset will be built in partnership with foreign capital since Mexico launched its energy reform programme.

“With this landmark partnership established, Pemex and First Reserve plan to invest capital in energy infrastructure projects throughout Mexico, combining the financing, structuring and industrial and operational experience needed to bring these critical projects to fruition,” First Reserve and Pemex said in their joint statement, noting that the partnership was also “a statement of foreign confidence in the Mexican energy industry.”

The two sides did not disclose financial terms of the deal. While no specific timeframe has been set for deploying the capital, “both organisations are already looking at a pipeline of near-term opportunities which exceeds the $1 billion commitment,” a spokesperson for First Reserve told Infrastructure Investor.

“All investments will be in energy infrastructure ranging throughout the energy value chain, including refineries, petrochem, pipelines and upstream,” the person added.

Based in Greenwich, Connecticut, First Reserve has raised more than $30 billion since its inception in 1983. The firm has completed more than 550 transactions, including platform investments and add-on acquisitions, across six continents.

Last June, the firm closed its second energy infrastructure fund on its hard cap of $2.5 billion. Like its predecessor, the vehicle focuses on contracted power, including conventional generation and renewable power; contracted midstream; contracted energy assets; and regulated transmission and distribution.