TransCanada, IEnova to build $2.1-B gas pipeline in Mexico

(Reuters)—Canadian pipeline operator TransCanada Corp. said it will build and operate a $2.1-B natural gas pipeline in Mexico, as the company continues to ramp up its presence in the Latin American country's large gas market.

The Sur de Texas-Tuxpan project will be a joint venture (JV) with IEnova, a subsidiary of Sempra Energy, backed by a 25-year gas transportation service contract with Mexico's state-owned power company.

TransCanada, which will own a 60% stake in the 497 mi (800 km) pipeline and be its operator, will invest $1.3 B in the project. IEnova will hold the remaining 40% stake.

The pipeline, which is expected to be in service in late 2018, is the largest of three new Mexican projects recently announced by the Calgary-based pipeline operator.

Construction has already begun on the $500-MM Tuxpan-Tula Pipeline and the $550-MM Tula-Villa de Reyes lines. The company, which also has other existing projects in Mexico, said its investment in the country now tops $5 B.

TransCanada's push into Mexico comes as the company continues to face delays on projects closer to home. Its Keystone XL oil pipeline expansion was rejected by US President Barack Obama late last year, and the company is struggling with opposition to its Energy East project in Canada.

It is also slated to build numerous gas lines tied to proposed natural gas export terminals on Canada's Pacific Coast, but final investment decisions on those LNG projects have been delayed by environmental and market concerns.

(Reporting by Julie Gordon and Arathy S. Nair; editing by Anil D'Silva and Tom Brown)

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