Engie, CFE to Expand Mayakan Pipeline

Engie and CFE reached an agreement to expand the Mayakan pipeline in Yucatan. Engie announced in September 2022 that it plans to invest US$1.5 billion in the project. The pipeline will be 700km long and will connect with PEMEX in Tabasco, then move to Valladolid, Yucatan. The development of the project, with which the state utility aims to supply gas to the partially isolated state of Yucatan, is expected to last 27 months.

CFE announced that it celebrated an agreement with Engie to determine the technical and commercial terms for the project. CFE said that the pipeline has been contracted since 1997 and that it can supply six of its gas-fired power plants. The pipeline is expected to supply two new combined cycle plants, Merida IV and Valladolid IV, which together have a capacity of over 1.5GW. 

CFE and TC Energy’s US$4.5 billion Southeast Gateway project will likely become the main supply channel for the Mayakan pipeline expansion. This project is expected to start functioning by 2025 and will supply natural gas to the southeast and center of the country.

The state-owned company assured that this agreement will guarantee a reliable, continuous and quality supply of natural gas and will boost the presidential commitment not to increase electricity rates. Manuel Bartlett, CFE’s Director, said that these public-private agreements strengthen CFE as well as contribute to the national economic and social development. “CFE seeks to obtain economic benefits, much like those already achieved in other, similar negotiations, in addition to contributing to the policy of President Andrés Manuel López Obrador to strengthen Mexico’s energy security and sovereignty for the benefit of Mexicans,” reported the company. 

“Just as it happened 25 years ago when Engie arrived in the country, today we have the opportunity to reiterate our commitment to the Mexican government and all Mexicans to develop projects that accompany energy policy to democratize access to competitive and clean energy for all while supporting the energy transition,” said André Canguçú, Networks Managing Director, ENGIE.

Other than using imported natural gas for its energy security, Mexico also aims to capitalize on exports in a gas-starved global market. Earlier this month CFE signed a contract with New Fortress Energy to add to the development of LNG hubs in the country. However, these projects have raised speculation since Mexico still needs to enhance its infrastructure to ensure it can develop them. According to experts, the country may not have enough capacity and pipelines to successfully support these projects. “There are a lot of moving parts that need to work in cohesion for these Mexico LNG projects to happen,” said Andrew Baker, Senior Editor, Natural Gas Intelligence. Hence the development of the Mayakan pipeline represents a great success.