Mexico Seeks Bids for $3 Billion Natural-Gas Pipeline Network

Comision Federal de Electricidad, Latin America’s largest utility by revenue, is seeking bids from private companies to build about 1,460 miles (2,349 kilometers) of natural-gas pipelines in northern Mexico.

Mexico’s state-owned power company, known as CFE, will “pay around $3 billion to expand its natural-gas network in four contracts for the states of Sonora, Sinaloa and Chihuahua,” Chief Executive Officer Antonio Vivanco said today in an interview in Houston.

Pipeline operators working in Mexico, such as Calgary-based TransCanada Corp. (TRP) and GDF Suez SA (GSZ), based in Courbevoie, France, are among the potential bidders, the company said. CFE will close the bidding process this fall and announce the winners of a 25-year contract by October, it 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 natural gas prices since 2001 in New York.

CFE plans to invest this year 97.5 ($7 billion) billion pesos to improve the efficiencies of its plants and its power distribution system.

“CFE is expanding the capacity of the Northwest region by more than 8,000 megawatts,” Vivanco said. “We’re updating 4 plants and setting up 10 power terminals in that area to replace the use of fuel oil with natural gas.”

The new capacity will double the volume of gas imports from the region, Vivanco said without elaborating. CFE is going to be “extremely aggressive when it comes to growth capacity from natural gas,” he said.

Gas futures traded in New York have declined 9.3 percent this year. Gas has rebounded 42 percent from a 10-year intraday low of $1.902 per million British thermal units on April 19.

To contact the reporter on this story: Carlos M. Rodriguez in Mexico City at carlosmr@bloomberg.net.

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net.

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