Fundraising

KKR’s Monterra Energy to build Mexico pipeline

The Mexico City midstream company will develop a refined products pipeline with a capacity of 165,000 barrels per day.

-

Monterra Energy, a midstream company backed by private equity firm KKR, is set to build a pipeline for the transport of imported refined products from Tuxpan, Veracruz on Mexico’s east coast into Central Mexico near Tula, Hidalgo.

The pipeline is aimed at improving efficiency and competition in Central Mexico, the Mexico City-based company said in a statement. It will be 18 inches in diametre, with an initial capacity of 100,000 barrels per day and eventually reaching a maximum capacity of 165,000 barrels per day.

“Monterra has access to an existing right-of-way that will expedite development and construction and allow an early commercial operation date,” the company said without providing further details.

“Thanks to the historic energy reforms instituted by President Enrique Peña Nieto, Monterro and our Mexican partners are able to make investments that will ultimately enable Mexican citizens to have choice in fuels and benefit the Mexican economy with private investment in new infrastructure,” said Arturo Vivar, Monterra Energy’s founder and chief executive.

The company has already acquired two anchor customers – Mexican gas station consortium G500 and a global commodities merchant – who together “will account for a significant portion of the project’s initial throughput volume of 100,000 barrels per day,” according to the statement.

KKR invested in Monterra Energy last May by making an equity commitment, the size of which the private equity firm has declined to disclose. At the time the partnership was announced, KKR said the purpose of the joint venture was to pursue investments in the midstream energy sector in Mexico.

Citing estimates from energy investment bank Tudor, Pickering, Holt & Co., KKR said that Mexico is expected to attract about $50 billion and $13 billion in capital expenditures spending for pipeline infrastructure and power generation, respectively, over the next five years.

Monterra Energy, which Vivar founded in 2014, marks KKR’s first energy infrastructure investment in Mexico.