Sempra Energy Wins $115M Deal To Build Liquid Fuel Terminal
Zacks Investment Research | Jul 12, 2017 09:20PM ET
Sempra Energy’s (NYSE:SRE) Mexican unit, Infraestructura Energética Nova, S.A.B. de C.V. (“IEnova”) has secured a liquid fuels project worth approximately $155 million from the Mexican authority. Per the terms, IEnova will construct a receipt, storage and send-out liquid fuels marine terminal on the Mexican Gulf Coast.
Details of the Project
The project is a 20-year contract awarded by Mexico’s Veracruz Port Administration. Under the agreement, IEnova’s responsibilities will include gaining permits, engineering, procurement, construction and financing of the terminal. In addition, the unit will supervise maintenance and operations of the project.
On completion, the terminal will have a capacity to supply 1.4 million barrels of gasoline, diesel and jet fuel to the central region of Mexico. IEnova expects to start operations at the project in the second half of 2018.
Apart from providing a significant amount of petroleum products, this project will also create employment opportunities for local dwellers. It is estimated that for the construction site, approximately 500 direct and 2,000 indirect workers will be needed.
Our View
With the global energy sector still in a state of flux to some extent, governments across nations have been undertaking various reformative initiatives to keep their energy companies profitable. Mexico was no exception. In fact, the nation’s energy sector has turned around in recent times, catalyzed by the comprehensive Energy Reform implemented in 2013, after it suffered a major setback a few years back owing to its declining oil-production.
Toward this end, the new liquid fuels terminal project reflects an expansion of business operations for IEnova in Mexico, where it already enjoys a strong presence. In fact, realizing the booming energy market in the region, IEnova has been making significant investments and project plans lately. In this line, in Sep 2016, the company took over the 50% equity interest that Petróleos Mexicanos (PEMEX) Transformación Industrial had in Gasoductos de Chihuahua. Notably, Gasoductos de Chihuahua builds and operates the energy infrastructure in Mexico.
On top of this, it has been announced yesterday that a reservoir with an estimated capacity of 1.4–2 billion barrels has been discovered by explorers in the country, other than state-owned Pemex. This will further encourage IEnova to make more investments in Mexico’s energy sector.
Going ahead, over the next five years, Sempra Energy’s projected compound annual growth rate (CAGR) for EPS is in the range of 10–11%, with a total capital investment assumption of $14.2 billion. Considering the above-mentioned developments, we believe the recent liquid fuel terminal project further strengthens Sempra Energy’s confidence in the IEnova unit as one of its major growth drivers over the next several years.
Get The News You Want
Price Performance
Sempra Energy has lagged the Zacks categorized Zacks Investment Research
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.