Mexico: Financing Of The US$743 Million Southern Section Of The Los Ramones Pipeline Project

Our firm, Rodríguez Dávalos Asociados (RDA) has played a key role as leading legal counsel for the entire Ramones pipeline project. This crossborder strategic infrastructure project has three different developing stages or segments: (1) "Ramones 1", (2) "Tag Norte" and (3) "Tag Sur". Throughout each one of these, we have represented TAG pipelines and its different partners in the Mexican side as well as given consultancy on certain issues to MGI in the US side. RDA has been involved comprehensively since the project was conceived. First we advised in the business, commercial and legal strategies; also, our involvement focused on the regulatory matters and expediting services; including filing and obtaining permits with the different agencies and regulatory bodies (environmental, cross border permits, with the energy regulatory commission, among others). Another crucial part was negotiating, drafting, reviewing and revising Shareholder Agreements, Fuel Transportation Agreements (FTA), Interconnection agreements, EPC agreements, among others. Finally, another interesting and challenging part was the developing the Right of Way legal strategy.

Who at your company led the transaction?

As founding partner of RDA, I can proudly say that we have a solid and proficient teamwork that has allowed us to address the wide range of legal and business issues that had to be dealt in the project.

I was involved in the entire development of the project and I led our clients through all the phases of it. I led the negotiation processes of terms and conditions on different type of agreements such as TSA, interconnections, finance, EPC, among others, and I gave consultancy throughout the different stages of this strategic project to our client on corporate, environmental, financing, antitrust issues, as well as with different regulatory bodies (CILA/IBWC, Energy Regulatory Commission, among others) and with local authorities covering the full scope of the legal matters involved.

Guillermo Manning, one of our Firm partners was in charge of the right of way strategy as well as the issuances of other easements. He and his team file and monitor before federal and local authorities the relevant permits, other authorizations and acquisitions through all the process of this linear pipeline project. His team conducted preliminary work, analysed regulatory elements of linear possessions and conducted verification of agrarian rights and applicable regulatory procedures.

Marco Sotomayor, partner of our Firm was in charge of the financing and corporate scope addressing key issues in this project. As TAG´s attorney and advisor, he coordinated all the financial efforts with Tag´s financial team. Raul Romero, a Senior Associate at our Firm, has been in charge of drafting, reviewing and revising transportation services agreements (TSA), interconnection agreements, EPC, Shareholders agreements and other material contracts as well as conducting relevant negotiations of the referred agreements.

Araceli Galvan Duque, a firm's associate, has been coordinating all the open access transportation permits for the three different phases of the Ramones pipeline project. She has filed and monitored the regulatory required permits all along the different phases of the Ramones pipeline project before the Energy Regulatory Commission (CRE), Anti- Trust Commission authorization, Cross Border permits and environmental permits. She has also been involved in the US section of the Ramones pipeline.

Alberto Zamacona, also a firm's associate, has been involved in a wide array of corporate matters as well as financial related issues. On the other hand, he has worked on the US section of the Ramones pipeline.

Please detail any complexities you faced and how your expertise helped resolve these issues?

Los Ramones gas pipeline will stretch more than 1000 kilometres from the US-Mexico border to the central state of Guanajuato, Mexico. An infrastructure project with such dimensions and characteristics faced multiple complexities at many different levels. RDA's extensive knowledge on the industry (RDA represents more than 60% of all the privately owned pipelines), particularly on linear projects, allowed us to tackle the multiple challenges. RDA´s team experience in projects like San Fernando pipeline, Kinder Morgan pipeline, Ethane pipeline, TDF LPG pipeline, Altiplano LPG Pipeline, Tejas Gas Pipeline and other relevant pipeline projects helped not only in the negotiation, but also in the drafting of a financeable TSA and EPC contract.

RDA's vast experience with privately owned pipelines, natural gas, LPG and petrochemicals in Mexico has allowed us to provide our clients with the best strategies for the acquisition of Right of Ways, and to successfully obtain the local and federal permits, such as municipal or local construction authorizations as well as land use authorizations. For the development of linear projects, it is essential to meet the multiple regulatory requirements before the different government agencies, such as the Regulatory Energy Commission, and comply with Cross Border permits as well as environmental and anti-trust permits and authorizations.

If you have any other comments to add, please feel free to detail below?

The Ramones pipeline project, in its 4 phases, is the most important natural gas project to be developed in Mexico. Its importance relies not only on the size of the investment, but on its strategic role for the gas supply to the central region of Mexico and on the development of new industry and the possibility to bring gas from new supply regions in the US, including shale gas production from the Mexican Northern region in the near future. Many are the positive effects of this enormous project. Among these, it is noteworthy to mention the creation of at least 8,000 jobs for workers during its high point of construction, plus the creation of indirect jobs and businesses that are foreseeable.

This pipeline is not only an essential project that will increase the availability of natural gas in Mexico but also it will impact positively Mexico in many different areas.

Originally published by www.lawyer-monthly.com, August 2014.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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