Thursday, July 18, 2024

French-owned Engie to invest US $2B in gas pipeline in Mexico’s southeast

Energy company Engie México will invest US $2 billion to build a second gas pipeline in southeastern Mexico, according to a senior executive with the French-owned firm.

Engie is committed to building a new pipeline parallel to the existing Mayakan pipeline that runs between Chiapas and Yucatán. The second pipeline will be shorter, beginning in Tabasco rather than Chiapas, but running to the same final delivery point in Valladolid, Yucatán.

Representatives of Engie Energy and CFE
The energy company signed an agreement with CFE earlier this week to “guarantee the transport of natural gas” for the Yucatán peninsula. (Engie Energy)

Ana Ludlow, Engie México’s chief government affairs and sustainability officer, told the news website Bloomberg Línea that the new pipeline will supply gas to two new Federal Electricity Commission (CFE) power plants in Yucatán, one in Mérida and another in Valladolid. The Mérida plant is slated to open in November, while the Valladolid one is scheduled to begin operations in January 2025.

Engie subsidiary Energía Mayakan signed an agreement with the state-owned CFE earlier this week for “the expansion of the Mayakan gas pipeline” in order to “guarantee the transport of natural gas for the generation of electricity required by the Yucatán Peninsula,” according to a company statement.

Ludlow said that construction of the new pipeline will cost approximately $2 billion and that it will be finished by the end of 2026. The money will come from Engie and its partners, Ludlow told Bloomberg Línea without offering further details. She also said that the project will create 4,500 jobs.

According to Engie’s statement, Energía Mayakan will be in charge of the project. It already operates a gas pipeline between a Pemex facility in the municipality of Reforma, Chiapas, and Valladolid.

Engie energy
Map of the second pipeline to be built alongside the existing Mayakan pipeline, which will also have the same final delivery point in Valladolid, Yucatán. (Engie Energy)

The new pipeline will run more than 700 kilometers between Ciudad Pemex in the Tabasco municipality of Macuspana and Valladolid. Ludlow said that the new pipeline will use “practically” the same right of way as the existing pipeline.

The operation of a second pipeline will increase Engie’s capacity to transport gas in southeastern Mexico from 250 million cubic feet per day to 567 million cubic feet, according to the company.

Engie also said that its project will “favor interconnection with the Puerta del Sureste project,” a joint initiative of Canadian company TC Energy and the CFE. The TC Energy project will allow natural gas to be transported from Brownsville, Texas, to Tuxpan and Coatzacoalcos in Veracruz and Paraíso in Tabasco.

Engie said that its project will “trigger economic development,” attract investment to southeastern Mexico and reduce electricity generation costs and the bills of millions of electricity customers in Chiapas, Tabasco, Campeche and Yucatán.

The company said that the operation of the two new CFE plants in Yucatán will avoid the annual emission of 4.6 million tonnes of carbon dioxide.

The supply of natural gas to the plants via the new pipeline will help eliminate the need to use dirtier and more expensive fossil fuels for electricity generation, Ludlow said.

With reports from Bloomberg Línea

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