The Southeast Gateway Pipeline, which is expected to be commissioned by mid-2025, will begin onshore in Tuxpan, Veracruz, then stretch offshore before making landfall at Coatzacoalcos, Veracruz and Dos Bocas, Tabasco to deliver 1.3 billion cubic feet per day of natural gas
TC Energy, CFE take FID on Southeast Gateway Pipeline project. (Credit: TransCanada PipeLines Limited, an affiliate of TC Energy Corporation)
TC Energy and Mexican state-owned electric utility Comisión Federal de Electricidad (CFE) have agreed to lay the $4.5bn Southeast Gateway Pipeline, a 715km long offshore natural gas pipeline to serve the southeast region of Mexico.
The two firms have reached a final investment decision (FID) to proceed and build the pipeline project which will have a capacity of 1.3 billion cubic feet per day.
The Southeast Gateway Pipeline project is part of a broader partnership announced by TC Energy and CFE with an objective to develop world-class energy infrastructure in Mexico.
According to TC Energy, the alliance is aimed at expediting the development of natural gas infrastructure in the central and southeast regions of the Central American country.
The Canadian pipeline operator said that the Southeast Gateway Pipeline will begin onshore in Tuxpan, Veracruz, then stretch offshore before making landfall at Coatzacoalcos, Veracruz and Dos Bocas, Tabasco.
The offshore Mexican natural gas pipeline is expected to be commissioned by mid-2025.
TC Energy president and CEO François Poirier said: “The Southeast Gateway Pipeline will be TC Energy’s second marine natural gas pipeline in Mexico, connecting to the coastal regions of Veracruz and Tabasco, and is another prime example of our ability to originate world-class projects that offer incremental growth to our long-term outlook.”
As part of their alliance, TC Energy and CFE will consolidate previous transportation service agreements (TSAs) signed in connection with the former’s natural gas pipeline assets in central Mexico. The TSAs will be now bundled under a single, US dollar-denominated take-or-pay contract that will be extended till 2055.
The new TSA will also be governing associated new infrastructure projects to be developed in conjunction with the Mexican electric utility, said TC Energy.
The parties have also agreed to mutually end their currently suspended international arbitrations related to the TVDR and TXTL pipelines. As a result, TC Energy will earn a return on and of all the capital it invested in the past in the assets.
Besides, the parties committed to work together to build and complete the TXTL pipeline by constructing its central segment, subject to reaching an FID in Q4 2022.