Mexico's Pemex declares Ramones II natgas pipeline tender void


By David Alire Garcia

MEXICO CITY, Oct 15 (Reuters) - State oil and gas monopolyPemex on Tuesday declared the tender void for the second phaseof Mexico's biggest natural gas pipeline project after only onebidder made an offer on the $1.8 billion project.

Pemex's gas unit PGPB said the bid did not comply with theproject's technical or economic specifications, which now castsdoubt on Mexico's future supplies of cheap natural gas.

Shortly after declaring the tender void, Pemex said in a statement that the second phase of the project will becompleted by the end of 2015.

The company said that in the next few days its TAG Pipelinesunit would establish the financial and legal framework for theproject.

In late September, only one bidder - a consortia formed bySpanish gas distributor Enagas and French energy firmGDF Suez - made an offer on the second phase of the 2.1billion cubic feet per day Ramones pipeline project.

The pipeline's second phase was expected to cover 460 miles(740 kilometers) spanning five northern-central Mexican states,and help the country satisfy growing demand with cheap gasimports from the United States.

The project also envisioned compression, metering andregulation stations along the route, as well as a new controlcenter.

The failure to award the contract will put in jeopardy theMexican government's goal of significantly boosting gas importsfrom Mexico's northern neighbor by next year, said MiriamGrunstein, an energy specialist with Mexico City-based researchinstitute CIDE.

"It also calls into question the conditions of Mexico'snational gas industry, particularly downstream, and thecommercial viability of projects like this one," said Grunstein.

Pemex has frequently called the $3.3 billion Ramonespipeline project its biggest energy infrastructure investment in40 years. If completed, the project would eventually supply afifth of the country's total natural gas demand.

The first phase of the pipeline, running from theU.S.-Mexico border to the town of Los Ramones about 75 miles(120 km) east of the industrial city of Monterrey, is expectedto be operating by the end of 2014.

IEnova, previously known as Sempra Mexico, isdeveloping the first phase of the project with a Pemexsubsidiary. Once both phases are completed, the Ramones pipelinewill extend 750 miles (1,200 km) from Agua Dulce, Texas, acrossthe border and deep into central Mexico's industrial heartland.

Agua Dulce is located near the booming Eagle Ford shale gasplay in southern Texas.

Pemex has said the project would boost natural gas importcapacity to about 3.4 bcf per day from about 1.4 bcf per day atpresent.

While Mexico's energy sector is dominated by Pemex, thecountry has been open to private companies in the transportationof gas for the past 18 years.

Since 1995, Mexico's gas pipeline infrastructure has grownby nearly 1,112 miles (1,790 km), or nearly 20 percent, oninvestment of $2 billion, according to Pemex data.

View Comments (0)