Mexico's US$3.9bn Southeast Gateway pipeline due to enter service this month

Natural gas pipeline operator TC Energy expects to begin service on the US$3.9bn Southeast Gateway pipeline in Mexico at the end of May, three years after the project's final investment decision.

"We are just waiting on approval for our regulated rate from the national energy commission or CNE," François Poirier, CEO of the Calgary-based company, told a Q1 conference call on Thursday. "Our expectation is to receive CNE approval by the end of May."

The 715km duct will provide 1.3Bf3/d (billion cubic feet per day) of natural gas to power plants that state company utility CFE is building in central and southeastern Mexico.

TC Energy says the pipeline will support the operations of 10 of CFE's planned natural gas power plants.

Construction of the mainly underwater pipeline cost 13% less than the original US$4.5bn estimate.

Natural gas demand in Mexico is growing rapidly, driven mainly by CFE's investments in new combined-cycle plants.

TC Energy said that Mexico natural gas flows hit a record 4.1Bf3/d on March 31. Average daily flows in the first quarter were 6% higher than in 1Q24.

Mexican pipelines

The company has run into construction delays on the US$400mn, southern section of the Villa de Reyes pipeline in central Mexico.

Citing land acquisition issues, Poirier said gas would not start flowing on the 110km-section of pipeline until the first half of 2026.

TC Energy had initially expected services to start on the southern section in 2023, shortly after completing the northern and lateral sections.

The completed pipeline will transport natural gas to power generation plants in central Mexico.

TC Energy has no immediate plans to build further pipelines in the country.

"While we are looking at, with our partner and customer, the CFE, a long-term planning scenario where there will be a need for additional capacity on a number of their systems, we don't see that happening in the immediate future," Poirier said.