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Sempra completes acquisition of El Paso's Mexican assets

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, May 5 -- Sempra Energy unit Sempra Pipelines & Storage (SPS) said it has completed acquisition of the Mexican natural gas pipeline and associated assets of El Paso Corp. for $300 million.

"These new assets allow us to quickly expand our natural gas infrastructure business in northern Mexico," said George S. Liparidis, SPS president and chief executive officer.

Analyst IHS Global Insight, concurred, saying that “the sale will strengthen Sempra's presence in the Mexican gas sector where it already participates in an LNG import terminal in Baja California, which began commercial operations in 2008, and owns the gas distributor Ecogas Mexico.”

SPS said the acquisition from El Paso includes a gas pipeline and compression assets in the Mexican state of Sonora and a 50% interest in a joint venture with Mexico’s Petroleos Mexicanos. The JV operates two gas pipelines and a propane system in northern Mexico.

SPS said the transaction has received authorization from the Mexican Federal Competition Commission, and that the pipeline and gas assets acquired are supported by customer contracts with an average duration of 13 years.

As part of the transaction, SPS acquired a 7-mile gas pipeline and a compressor station in the state of Sonora. The line transports natural gas from the US border to a Mexican power plant that provides electricity to the Mexico’s state-owned Comision Federal de Electricidad.

The JV with Pemex owns and operates several facilities, including:

• The 23-mile, 24-in. Samalayuca gas pipeline and Gloria a Dios compressor station in Chihuahua that supply gas from the US to various Mexican power plants.

• The 70-mile, 36-in. San Fernando gas pipeline in the state of Tamaulipas.

• The 114-mile, 12-in. pipeline that transports liquid propane from the Burgos production area to a delivery facility near the city of Monterrey.

SPS owns several other assets in Mexico, including pipelines in Baja California connecting Sempra LNG's LNG receipt terminal near Ensenada with various power plants in the region, as well as with pipeline systems in the US.

SPS also owns Ecogas Mexico SRL, a gas utility that serves more than 90,000 residential, commercial, and industrial customers in Northern Mexico with operations in Mexicali, Chihuahua, La Laguna, and Durango.

El Paso Corp. agreed to sell its interest in Mexican pipeline and compression assets to SPS in February, and it expected the $300 million transaction to close in the second quarter, pending lender consent and regulatory approval (OGJ Online, Feb. 24, 2010).

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