Comision Federal de Electricidad, Latin America’s largest utility by revenue, awarded a contract to build and operate a 530-kilometer (329 mile) natural gas pipeline to Sempra Energy. (SRE:US)
Sempra will build the gas pipeline in northern Mexico and will operate it for 25 years, CFE, as the Mexico City-based company is known, said in an e-mailed statement today. The pipeline will be built in two phases, one to be completed by October 2014 and the other by July 2015, CFE said.
Mexico, which has the ninth-longest pipeline infrastructure in the world, is expanding its 6,000-mile gas network by 40 percent as imports increase to a record amid the lowest gas prices since 2001 in New York. The growing demand for imports is forcing some pipelines to run at 95 percent of capacity and creating a bottleneck in some regions prompting shortages.
Sempra’s offer to charge state-owned CFE $0.13 per million British thermal units defeated bids from companies such as Calgary-based TransCanada Corp. (TRP), Korea Gas Corp. and Mitsui & Co.
The awarded pipeline contract will connect gas supplies from Arizona to Guaymas, Sonora, in northwestern Mexico. Once the two phases are completed the pipeline will have a capacity of 760 million cubic feet a day and investments may range between $630 million and $730 million, according to a presentation from the state-owned oil producer Petroleos Mexicanos from last month.
Sempra, based in San Diego, rose 0.5 percent to $67.88 at the close in New York, the highest since Aug. 20.
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