TransCanada, IEnova win subsea Mexico gas pipeline

OREANDA-NEWS. June 14, 2016. TransCanada and IEnova, the Mexican arm of US Sempra, won a tender to build, maintain and operate a cross-border, subsea natural gas pipeline that will transport gas from southern Texas to Tuxpan in the Mexican state of Veracruz.

The two firms, under the joint venture Infraestructura Marina del Golfo, presented a \\$2.1bn offer for the major project, well below the \\$3.1bn that Mexican state-owned utility CFE was willing to pay.

The 25-year contract provides for the transportation of up to 2.6bn ft3/d (72.8mn m3/d) of gas, with operations expected to begin by the end of 2018.

The pipeline is one of a series of midstream projects that are expanding the use of low-cost US gas in Mexico. US exports to Mexico in March rose to 3.4bn ft3/d, up by 41pc from a year earlier, according to the most recent US Energy Information Administration data.

TransCanada will own 60pc of the project, investing about \\$1.3bn, and IEnova the remaining 40pc.

The pipeline will connect to the Nueces - Brownsville pipeline in Texas, another of CFE's projects which was awarded today for \\$1.5bn to Valley Crossing Pipeline, a subsidiary of US Spectra Energy.

Spectra said the project includes a 5bn ft3/d header system, near the Agua Dulce hub in Nueces, and a 2.6bn ft3/d gas pipeline that will transport the gas to Brownsville, in Texas.

The subsea pipeline built by TransCanada and IEnova will also connect to Mexico's Altamira pipeline system; and the Tuxpan - Tula pipeline, in the states of Veracruz and Hidalgo, to supply gas to CFE's nearby power plants.

TransCanada earlier won two other gas pipeline projects covering the Mexican states of Hidalgo, Quer?taro, Guanajuato and San Luis Potosi.

The only other contender in today's auction was Ducto Mar Gas, linked to Mexican billionaire Carlos Slim, but it did not comply with the requirements, CFE said.

In April, Mexico imported an average of 1.695bn ft3/d of gas, including gas derived from LNG, 32.1pc more than in April 2015, government data indicates.