Year: 2020

Winner: Ca-Ku-A1 Gas Compression Project

SPONSOR: ACS Servicios, Comunicaciones y Energia SL (95%); Atlantica Yield plc (5%)

LOCATION: Ku-Maloop-Zaap oil field, Bay of Campeche, Mexico

FINANCING TYPE & SIZE: $403.9 billion senior-secured credit term loan facility

BANKS: ING, MUFG Bank; Banco Nacional de Comercio Exterior, S.N.C., I.B.D.; Banco Nacional de Obras y Servicios Públicos, S.N.C., I.B.D.; Bank of China – Mexico and New York branches; S.A. Institución de Banca Múltiple; ING Bank N.V., Dublin Branch; Instituto de Crédito Oficial, EPE; Intesa Sanpaolo S.P.A., New York Branch; Nacional Financiera, S.N.C., I.B.D.; Societe Generale; The Norinchukin Bank; Intesa Sanpaolo S.p.a. New York Branch; Societe Generale; Institucion de Banca Multiple, Instituto de Credito Oficial, EPE; Banobras; Nacional Financiera; Bancomext; ICO

LAW FIRMS: Allen & Overy LLP; Garrigues LLP; Ritch Mueller, Heather y Nicolau, S.C.

SUPPORT: Black & Veatch Management Consultants (independent engineer)

The Ca-Ku-A1 gas compression unit, located on the Ku-Maloob-Zaap oilfield in the Bay of Campeche, Mexico is a 450 MM cf/d offshore facility that will help provide national oil company, Pemex, with increasing its efficiencies throughout the underwater oil reservoir and also help reverse its production decline. The deal for the greenfield project, was financed by a $403.9 million senior-secured credit term loan facility. It has an 11-year take-or-pay fixed tariff compression services contract.

A complex transaction that included 13 banks from across the world, was a critical piece of infrastructure to help support Pemex in its quest to rebuild its operations more efficiently after billions of government support in the past year. The KMZ oil field, in 2018, represented roughly 48% of Pemex’s total crude oil and 14.4% of total natural gas production. According to financing documents, the project is expected to help increase incremental recovery 2-4%. Construction started in October 2017 and ended in the first quarter of 2020.

Servicios Compresion de Gas, which belongs to Mexican engineering firm Avanzia and Spanish firms Dragados Offshore and Cobra, is focused on compression of sour gas with the ability to segregate currents of sour gas with high and low nitrogen content.

It also closed during the complex and difficult environment of the COVID-19 pandemic and a collapse in oil prices. As a result of the lower revenues, this put a financial strain on the Mexican government that led ratings agencies to downgrade the sovereign as well as Pemex.

An interesting aspect of the financing structure of the deal was a protective clause that included a loan margin price step-up mechanism in the event of a downgrade prior to the first drawdown. A ratings downgrade trigger in project finance structures is rare, however it proved prescient. The downgrades triggered the mechanism within a few weeks of the closing of the deal.

Overall the deal was twice oversubscribed and among the rare oil and gas project finance operations in Mexico completed in the review period and likely beyond into the end of 2020.

All supporting financial institutions and law firms were transmitted to LatinFinance by the award category winners. For updates please email