Howard Energy Partners and Grupo Clisa reach FC for US-Mexico gas pipeline

Howard Energy Partners and Grupo Clisa have reached financial closure for the design, construction and operation of the Nueva Era Pipeline System project aimed to transport natural gas supplies from the U.S. to end-users in and around Monterrey, Mexico.

A group of international financial institutions has acted as arrangers and lenders for US$353.3 million in financing for the pipeline project. Milbank advised Mitsubishi UFJ Financial Group and Santander Bank as lead arrangers, and lenders Sumitomo Mitsui Banking Corp., Caixa, and Société Générale S.A. 

The Nueva Era Pipeline will run approximately 330 km from a hub in Webb County, which borders the Rio Grande River, into the northern Mexican state of Nuevo León, whose largest city is Monterrey. The complex cross-border nature of the project involves both US and Mexican collateral security packages and regulatory regimes.

Comision Federal de Electricidad (CFE), Mexico’s state-owned electric utility, is the anchor shipper on the line, which will also offer natural gas transportation services to private shippers on an open access basis. Nueva Era is one of the first CFE pipelines to include portions in both Mexico and the US.

Mr. Michalchuk, partner in Milbank’s Global Project, Energy and Infrastructure Finance Group, said:

“The Nueva Era project is the latest pipeline transaction the firm has handled that successfully joins American natural gas supplies with the energy needs of northern Mexico, at a substantially lower cost than with traditional energy sources. These projects are a win-win benefitting American energy producers as well as Mexican customers.”