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The Southeast Gateway Pipeline will be able to pump nearly 37 mcm per day of gas (Image: TC Energy)

TC Energy, CFE set up strategic alliance

to build Southeast Gateway Pipeline

TC Energy (Canada) and Mexico’s national middle of 2025.
power provider, the Federal Energy Commis- TC Energy did not disclose the exact value
sion (CFE), have struck an agreement on the of its deal with the state-owned power provider.
formation of a strategic alliance that will work However, it did say that it anticipated securing
to speed up development of the Southeast Gate- up to $2bn worth of incremental country-level
way pipeline and other natural gas transporta- debt financing. This sum, in combination with
tion projects. a recently closed term loan credit agreement
The Canadian company announced the deal with Infraestructura Marina del Golfo (IMG),
with CFE in a recent statement, saying that the the joint venture that owns the Sur de Texas
new alliance would focus on building up gas pipeline, in which TC Energy has a 60% stake,
infrastructure in south-eastern and central should raise country-level debt, non-recourse
Mexico. To achieve this aim, it said, the parties to TC Energy, to a level equivalent to 65% of the
will consolidate all of the transportation service Southeast Gateway Pipeline’s cost, it stated.
agreements (TSAs) signed between TC Ener- The company also said it would continue
gy’s Mexican subsidiary, Transportadora de Gas monitoring and managing its net economic
Natural de la Huasteca (TGNH), and CFE. exposure in Mexico to around 10% of total con-
As a result of this consolidation, all three of solidated comparable EBITDA (earnings before
TGNH’s midstream assets in central Mexico – interest, taxes, depreciation and amortisation)
namely, the Tamazunchale, Tula-Villa de Reyes via the “utilisation of country-level debt financ-
(TVDR) and Tuxpan-Tula (TXTL) pipelines – ing, potential strategic partnership opportuni-
will fall under the umbrella of a single TSA. This ties in Mexico and evaluating appropriate forms
unitised TSA will not expire until 2055 and will of risk insurance.”
be denominated in US dollars, TC Energy said. The formation of the alliance will make CFE a
The new TSA will also cover all related infra- shareholder in TGNH and its midstream assets,
structure projects that the Canadian company the statement noted. “Following positive FID,
develops in co-operation with CFE, the state- in-service of the Southeast Gateway Pipeline
ment added. This is relevant, as the parties have project and subject to certain other conditions,
now taken a final investment decision (FID) in the CFE’s equity interest in TGNH would equal
favour of proceeding with the construction of 15%,” it said. “At the end of Southeast Gateway
the Southeast Gateway Pipeline, which will have Pipeline’s contract life in 2055 and after TC
a capacity of 1.3bn cubic feet (36.81mn cubic Energy has recovered a full return on and of cap-
metres) per day. The link will follow a 715-km ital, the CFE’s equity interest in TGNH would
route across the southern Gulf of Mexico, orig- increase to approximately 35%, thereby reflect-
inating in Tuxpan, Veracruz and making land- ing the equivalent of approximately 49% of the
fall at Coatzacoalcos, Veracruz and Dos Bocas, net value of the Southeast Gateway Pipeline and
Tabasco. It is slated to begin operating in the 15% of the other TGNH pipelines.” ™

P6 www. NEWSBASE .com Week 33 17•August•2022