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TransCanada Expands Pipeline Reach In Mexico With $2B Deal

Gas Pipeline

TransCanada Corp announced a new joint venture in Mexico on Monday, through which it will help build and operate a $2.1 billion natural gas pipeline in the southernmost North American country.

TransCanada’s partner, IEnova, a unit of Sempra Energy, will own 40 percent of the pipeline, named Sur de Texas-Tuxpan, while the Canadian firm will own the rest.

The 800-kilometer (497 mile) pipeline will become operational in the second half of 2018, after TransCanada has invested roughly US$1.3 billion for its construction.

“This new project brings our footprint of existing assets and projects in development in Mexico to more than $5 billion, all underpinned by 25-year agreements with Mexico’s state power company,” Russ Girling, the CEO and president of TransCanada, said, according to The Financial Post. "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.”

The pipeline will be 42 inches in diameter and will begin offshore in the Gulf of Mexico near Brownsville, TX. Its endpoint will reach the city of Tuxpan, in the Mexican state of Veracruz.

The project will also interconnect TransCanada’s existing pipelines and related projects - CENAGAS, Tamazunchale, Tuxpan-Tula and others.

TransCanada is currently working on two other new pipelines in Mexico.

The $500 million Tuxpan-Tula, along with the $550 million Tula-Villa de Reyes pipeline, has already begun construction, according to Reuters.

Related: Utah Oil Sands Set For A Bright And Clean Future

U.S. President Barack Obama rejected the Calgary-based company’s Keystone XL pipeline project last year.

The firm also plans to build new lines on its home country’s Pacific Coast, though environmental and business concerns have led the liquefied natural gas initiatives to be stalled.

The Toronto Stock Exchange listed TransCanada’s share price up 0.26 percent at $42.77 on Monday.

By Zainab Calcuttawala for Oilprice.com

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