Sur de Texas Pipeline Exports Abundant Natural Gas to Mexico

The Sur de Texas Pipeline transported 15 percent of Mexico’s total pipeline natural gas imports in 2021. The 770km offshore line moves natural gas from the Texas border town Brownsville to industrial and energy markets in the eastern and central regions of Mexico.

For over a decade, Mexico has slowly accelerated its ongoing energy transition. When it comes to fuel for power production, the country is slowly replacing fuel oil and diesel as its main sources by switching to the use of natural gas. Since most of this gas is imported, the government has made significant efforts to promote the somewhat underdeveloped pipeline infrastructure system, including the Sur de Texas Pipeline.

In June 2016, IMG, a joint partnership between TC Energy and IEnova, won the contract to construct the Sur de Texas-Tuxpan pipeline. According to the description provided on TC Energy’s website, Sur de Texas operates on a publicly backed 25-year contract and runs almost entirely along the 800km that make up the Gulf of Mexico.

The natural gas transported by IMG arrives at power plants in Altamira, Tamaulipas and Tuxpan, Veracruz, where it interconnects with the Tamazunchale and Tula pipelines and other third-party gas facilities. Additionally, the system has the capacity to supply power plants that still operate on fuel oil but could be transformed to use natural gas, if required.

TC Energy owns a 65 percent stake in IMG and is currently the pipeline’s operator. Therefore, company is exposed to operational and construction risks, as well as penalties for service delays. In Mexico, TC Energy’s segment of natural gas pipelines mainly consists of the company’s investments in 2,503km of regulated natural gas pipelines that are currently active.

There have been slightly disparate results in the segmented revenues of each section of the Sur de Texas pipeline. The data provided by TC Energy reveals that the total revenues of the Canadian segment slightly rose from US$4,469MM to US$4,519MM, while the US segment also saw an increase from US$5,031MM to US$5,233MM. In Mexico, however, the revenues were reduced from US$716MM to US$605MM, a figure that IMG hopes to improve throughout its operations in 2022.