TransCanada Corp. is placing a bet on Mexico’s demand for fuels.
The Calgary-based pipeline owner is joining with the Mexican company Sierra Oil & Gas to build an $800 million marine terminal and pipeline in the Mexican port of Tuxpan, the companies said in a statement. The project will transport gasoline, diesel and jet fuel to central Mexico.
Mexico, the largest importer of U.S. fuel, gets an infrastructure boost. The nation relies on imports for 55 percent of its gasoline needs, according to June data from Petroleos Mexicanos, the state-owned oil company. Pemex has struggled to process enough crude at its six refineries and has said it’s seeking partners to help with operations and improvements.
“There are not that many markets in the world where you can build a refined products infrastructure project of this scale, and Mexico is one of them,” Ivan Sandrea, chief executive officer of Sierra, said in a telephone interview. “Mexico needs more import infrastructure to meet growing fuel demand; I cannot see the country moving forward without that.”
TransCanada, which announced in March that it would sell minority stakes in its $2 billion Mexican natural gas pipeline business to help fund the $10.2 billion purchase of Columbia Pipeline Group Inc., will have a 50 percent stake in the project. Sierra, which is backed by Riverstone Energy Ltd and which won oil blocks in the country’s first competitive oil auctions, will have 40 percent. The remainder is owned by Mexico City-based Grupo TMM SA, a Latin America-focused maritime transportation company.
”We are extremely excited for this project which represents an important expansion of our portfolio in Mexico,” said Robert Jones, TransCanada’s Mexico president, in an emailed statement. “TransCanada’s construction and operating experience will provide significant synergies to safely transport refined products in the central region of the country.”