TransCanada to construct new natural gas pipeline in Mexico

North American energy infrastructure provider TransCanada Corporation has been selected to build, own and operate the Tula – Villa de Reyes pipeline in Mexico.

TransCanada intends to invest nearly $550m to construct the 420km natural gas pipeline in Mexico.

The 36-inch diameter pipeline will be able to supply 886 million cubic feet of natural gas every day to the Mexican state-owned power company, Comision Federal de Electricidad (CFE).

TransCanada will construct the pipeline as part of a 25-year natural gas transportation service contract with the power company.

Expected to be operational by early 2018, the new natural gas pipeline will add to the existing five major pipeline systems operated by the Calgary-based company in Mexico.

With the new addition, TransCanada will be investing a total of $3.6bn in the North American country.

TransCanada president and chief executive officer Russ Girling said: "The Tula – Villa de Reyes Pipeline complements our existing pipeline network in Mexico and furthers our strategy of owning and operating highly contracted and regulated assets that generate stable and predictable earnings and cash flow streams."

The pipeline will start from the Tula de Allende town in the central state of Hidalgo located in the north of Mexico City and will continue till Villa de Reyes town in the state of San Luis Potosi.

It will help transport natural gas to power generation facilities in the central region of Mexico.

The current project will be connected with the company’s two other existing pipelines, Tamazunchale and Tuxpan – Tula pipelines, as well as with other gas transporters in the region.

In November last year, TransCanada was awarded the Tuxpan – Tula pipeline project.