Orrick’s Houston and Latin America teams are representing Gas y Petroquímica de Occidente, S.A. de C.V. (Mexico) and G2X Energy, Inc. (US), both subsidiaries of Switzerland-based Proman, in the development of a $1.3 billion ammonia plant in Mexico. As part of this representation, in August 2017, our teams helped Proman close a transaction with Mexico’s Comisión Federal de Electridad to arrange for the purchase, sale and transportation of low-cost natural gas from the United States to the plant in Mexico.
The transaction is a first-of-its-kind as Mexico undertakes a massive expansion of its natural gas pipeline system, which will triple the amount of gas pipeline capacity in the country and increase capacity by over 25 billion cubic feet per day.
Our involvement included helping structure and arrange the cross-border gas supply among four different counterparties, including agreements for the private sale of natural gas in Mexico, which - until the new Mexican energy reform - had not been permitted and for which there was little Mexican experience or precedent.
In addition to helping structure the gas supply contracts, we also set up a gas marketing subsidiary for G2X in Mexico and advised on the various U.S. and Mexican federal and state regulatory issues in connection with the gas supply, which supported the project financing for the plant.