A federal judge in Mexico’s Sonora state last week threw out an injunction that was preventing the 510 MMcf/d Guaymas-El Oro natural gas pipeline from resuming commercial operations.
The 205-mile pipeline in Sonora and Sinaloa states, which is owned by Infraestructura Energética Nova (IEnova), entered operation in May 2017, but has been inactive since August 2017, after members of the Loma de Bácum faction of the indigenous Yaqui tribe removed a section of the pipe.
IEnova declared a force majeure event at the time, and the pipeline has been dormant since.
“The company has begun a series of actions with relevant governmental authorities in order to resume operations,” IEnova said in its 2018 annual report. “The company believes that the relevant transportation services agreements for the Sonora pipeline provide adequate protection with regards to the interruption of operations, and the company has not experienced an economic impact.”
Energy ministry Sener conducted an indigenous consultation for the project that began in April 2014 and concluded in August 2015. In the process, seven of the eight Yaqui communities gave their consent for the project to go forward, with only the Loma de Bácum community opposing it.
IEnova went ahead with construction, after which the Bacúm leadership sought intervention from the courts in 2016.
In a response to the latest ruling, the traditional authorities of the eight Yaqui communities said that the judge in Sonora’s seventh district had determined “that the consultation activities … in which we participated were sufficient, and the necessary consensus was reached.”
The group added that, “we celebrate that the judge has listened to our arguments and taken into account the will of the vast majority of the people in the Yaqui tribe that we want the common good of our people, and that we have participated in the consultation in good faith.”
In reference to the opposition from the Loma de Bácum leadership, the statement said, “We call on our friends who have shown their nonconformity to work in union with the rest of the Yaqui tribe and to find a way to begin receiving the benefits that this project brings us.”
Mexican and U.S. media outlets quoted Rodrigo González Enríquez, an adviser to the Loma de Bácum community, as saying that Bácum leaders plan to appeal the ruling.
Mexican state power utility Comisión Federal de Electricidad (CFE) is the pipeline’s sole customer under a 25-year firm transport services agreement. Guaymas-El Oro is one of seven pipeline projects anchored by CFE that have been delayed by force majeure events.
Under the leadership of CEO Manuel Bartlett, an appointee of president Andrés Manuel López Obrador, CFE is pursuing international arbitration in an effort to modify certain clauses of the transport services contracts for each pipeline and obtain reimbursement for fixed-capacity charges it has made to the developers, as well as for the costs of pursuing arbitration.
The most visible of the seven projects is the 2.6 Bcf/d Sur de Texas-Tuxpan marine pipeline, which IEnova co-owns with TC Energy Corp.
Fitch Ratings last week revised the outlook for IEnova’s ‘BBB+’ rating to negative from stable.
“The modification … corresponds to the delays of CFE in issuing the proof of acceptance (constancia de aceptación) that would allow the Sur de Texas-Tuxpan marine pipeline to enter commercial operations, as well as the arbitration requests sent to certain natural gas pipeline developers,” IEnova said.
Guaymas-El Oro is one of two sections of IEnova’s Sonora pipeline system, which spans 519 miles from the border town of Sásabe, Sonora, to El Oro, Sinaloa.
The other section is the 314-mile, 770 MMcf/d Sásabe-Puerto Libertad-Guaymas pipeline, which receives gas at the U.S. border and remains operational.
IEnova’s second quarter earnings call is scheduled for July 25. The company is a subsidiary of San Diego, Calif.-based Sempra Energy.