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U.S. Pipelines Spurn Latest Pemex RFP

The two North American pipelines with substantial stakes in Mexico have passed up the latest bidding solicitation by Petroleos Mexicanos (Pemex), which has been looking for potential builders for a $1.8 billion natural gas pipeline, considered the biggest now ongoing in the country.

Units of San Diego-based Sempra Energy and the Houston-based arm of TransCanada Corp. failed to submit bids, and Pemex indicated Tuesday that it voided its request for proposals (RFP) after drawing only one bidder, which the national oil and gas company deemed inadequate.

Pemex's gas unit PGPB declared that the bid by a European consortium did not comply with the Los Ramones Pipeline project's technical or economic specifications, according to reports. In late September, there was reportedly only a bid from a consortium formed by Spain's Enagas and France's DGF Suez.

On Wednesday Pemex said it has signed a memorandum of understanding with Korea Eximbank to open a $2 billion credit line for financing a range of projects, potentially including the second phase of Los Ramones. Pemex said the financing option also would be available to companies providing services to the national firm for new projects geared to increase its production and profitability.

The RFP was for the second phase of the Ramones project, a proposed pipeline that would run 460 miles across five northern-central Mexican states. The project is part of Mexico's push to take advantage of more low-priced U.S. natural gas to convert more of the nation's electric generation from oil to gas-fired plants.

Sempra International's Mexico operations already were awarded the bid to build the first phase of Los Ramones, a 70-mile gas pipeline from the Texas-Tamaulipas border to Nuevo Leon, which is expected to come in service the second half of 2014. A San Diego-based spokesperson told NGI late Tuesday that the company didn't like the terms and conditions of the second part of the project, concluding that it did not fit the risk profile of its Mexican portfolio.

The project called for compression, metering and regulation stations along the route, together with a control center for the growing system of transmission pipes in Mexico, which both Sempra and TransCanada have helped build in the past 10 years (see Daily GPI, Nov. 2, 2012).

Sempra's Mexico subsidiary, IEnova, "decided not to submit a bid for the Los Ramones-II pipeline project based upon its assessment of the risk of the project relative to its existing portfolio," the spokesperson said. "In particular, certain terms and conditions that were unique to this project made it difficult to move forward with a bid."

While Sempra officials said they understand Pemex had voided the bidding solicitation, they also characterized the pipeline project as "critical for the whole country," noting they will be watching closely to see how Pemex ultimately proceeds.

For TransCanada, a Houston-based spokeswoman told NGI that there are "many considerations taken into account when [we] choose to participate in a project, including opportunities in other markets." TransCanada, unlike Sempra, has not been involved in this particular pipeline project, she said.

"Mexico requires significant infrastructure to bring more natural gas to market, and TransCanada does look forward to continuing our positive relationship with Pemex and exploring future opportunities to work with them on energy infrastructure investments."

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