IEnova Reports Growth and Eyes Further Opportunity

Sempra Mexican arm IEnova reported positive results during the 1Q reporting season. The company outlined its investments forecasts for 2021 and fostered an uptick in profits of 4 percent compared to 1Q20. Furthermore, IEnova sees partnerships with Mexico’s state-owned companies as the ideal strategy.

In an earnings call reported by Natural Gas Intel, IEnova CEO Tania Ortiz said that the Energía Costa Azul liquefied natural gas (LNG) export project remained the company’s primary focus. The 200 kilometers of pipeline in construction furthermore remain an important part of the company’s portfolio.

Ortiz commented on the hydrocarbons law reform that passed through congress, pointing out that it was still somewhat too early to understand the effects of such measures. Mexico’s fundamentals offer plenty of perspective regardless: “you need to keep your sight on the fundamentals and on the long-term, and Mexico continues to need energy infrastructure to be able to supply its energy needs, and it will continue to require private investment to meet those needs,” said Ortiz, adding that “we are going through some important changes in the regulatory and legal framework in the sector. So, we need to be careful as to how we evaluate those changes and continue to find ways to collaborate with the current administration and develop projects.”

Rather than fighting the changes that López Obrador’s administration seeks to impulse, once again placing the state production companies at the forefront of the energy sector after years of growing private participation following ex-president Peña Nieto’s 2014 Energy  Reform, Ortiz prefers to avoid risk and work within the space provided for the private sector: “All of these changes point to that. Working together with CFE and Cenagas for us, for others it may be PEMEX, finding ways to work with them is the correct approach,” she said.

During the call, IEnova explained that it aims to expand its Mexican portfolio through cross-border renewable power plants, working for both Mexico and the US, as well as by growing its natural gas off-taker clientele for the company’s pipeline network that span across 10 states in Mexico.

According to S&P, after Sempra Energy offered once again to acquire the remaining 29.83 percent stake in its Mexican arm IEnova during April, previously valued at US$6.13 billion, IEnova has made several moves in the Mexican energy sector. The offer for the shares stands until May 24.

During this first quarter, IEnova’s EBITDA increased 4 percent to US$261. The relative increase of US$10 million compared to the same quarter in 2020 is due to a higher margin in the gas business, lower operating expenses, the entering into operation of solar power plants Don Diego and Border solar and the acquisition of the remaining 50 percent of the Energía Sierra Juarez wind farm. The company said that this positive news was offset somewhat by lower results in the thermoelectric Mexicali power plant.