TransCanada, Sempra to Build Mexican Offshore Pipeline
June 13 2016 - 4:37PM
Dow Jones News
By Anthony Harrup
MEXICO CITY -- TransCanada Corp. and the Mexican unit of Sempra
Energy on Monday won a contract to build a 500-mile offshore
pipeline to carry natural gas from South Texas to northeastern
Mexico.
Infraestructura Marina del Golfo, which is 60% owned by
TransCanada and 40% by Infraestructura Energética Nova SAB, bid
$2.1 billion to build, own and operate the pipeline from
Brownsville, Texas, to the Mexican Gulf port of Tuxpan.
The line will run under the Gulf of Mexico with capacity to
transport 2.6 billion cubic feet a day of natural gas. It will
supply power plants of Mexican state electric utility Comisión
Federal de Electricidad, or CFE, under a 25-year service contract.
The CFE said the transport tariff offered was among the most
competitive globally.
"The South Texas-Tuxpan gas pipeline will contribute to CFE's
strategy of replacing expensive and polluting fuels such as fuel
oil and diesel in generating electricity," the utility said.
The bid was the only one for the project, and was well below the
$3.1 billion cost that the CFE had initially estimated. An earlier
second bidder, Ducto Mar Gas, had been disqualified as it had no
offshore construction experience and failed to meet financial
guarantees, the CFE said.
TransCanada operates two natural gas pipeline systems in Mexico
and is building two more that are expected to go into operation
late this year. With Monday's project award and others won
recently, the company has assets and projects under development in
Mexico of around $5 billion.
"We are extremely pleased to further our growth plans in Mexico
with one of the most important natural gas infrastructure projects
for that country's future," TransCanada President and Chief
Executive Russ Girling said in a statement.
TransCanada was among the first private companies to build
natural gas pipelines in Mexico in the mid-1990s when transport and
distribution of the fuel were opened to the private sector.
Sempra unit IEnova operates gas pipelines, a liquefied natural
gas terminal, natural gas distribution systems and power generation
plants.
With the natural gas pipelines promoted by the CFE and state oil
company Petróleos Mexicanos, Mexico's aim is to increase its
pipeline network by 75% between 2012 and 2018.
The expansion began after Mexico missed out on benefits of the
U.S. shale gas boom that lowered prices of the fuel in North
America. The lack of pipeline infrastructure in 2012 and early 2013
meant Mexico was unable to take advantage of the lower prices, and
was forced on numerous occasions to cut gas supplies to the
industry.
Write to Anthony Harrup at anthony.harrup@wsj.com
(END) Dow Jones Newswires
June 13, 2016 16:22 ET (20:22 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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