TC Energy Reports Update on Mexican Projects

TC Energy has issued its 3Q22 report. The company announced strong results and underlined its strengthened commercial ties with Mexico, bolstered by its natural gas pipeline projects and alliance with state utility CFE.

The company highlighted continued strong performance and results. “We remain opportunity rich with a portfolio of US$34 billion in fully sanctioned secured capital projects that will support long-term sustainable comparable EBITDA growth and an expected annual dividend growth rate of 3 to 5 percent. Along with increased cash flows, capital rotation will increase in its prominence to fund accretive growth opportunities, accelerate our deleveraging priorities and deliver incremental value to our shareholders," said François Poirier, CEO, TC Energy.

The report cited the alliance TC formed with CFE in August 2022 for the development of natural gas infrastructure. The deal extends through 2055. “The strategic alliance provides CFE with the ability to hold an equity interest in Transportadora de Gas Natural de la Huasteca (TGNH), which is conditional upon the CFE contributing capital, acquiring land and supporting permitting on the TGNH projects. Upon in-service of the Southeast Gateway pipeline, CFE’s equity interest in TGNH would equal 15 percent, which would increase to approximately 35 percent upon expiry of the contract in 2055,” reads the report.

The energy giants also developed the Villa de Reyes and the Tula pipelines. The north section of the Villa de Reyes pipeline and the east section of the Tula started commercial operation during 3Q22, while the lateral and south sections of Villa de Reyes are expected to come online in 2023.

The coalition reached an agreement to invest US$4.5 billion to build the Southeast Gateway pipeline, a 1.3 Bcf/d, 715 km offshore natural gas pipeline. This project will be in the southeast region of Mexico with an expected in-service date by mid-2025. “The agreement further demonstrates how we are leveraging our differentiated North American strategy to deliver energy solutions across our extensive footprint. Once in service in mid-2025, the Southeast Gateway pipeline is expected to benefit millions of people through increased access to clean, reliable and affordable energy,” said Poirier.

Poirier also added that TC Energy issued US$1.8 billion in common equity to provide certainty for its plans. He added that the company resolved international arbitrations with CFE on the Villa de Reyes and Tula pipeline projects, which enabled a full return of all its previous capital invested.

According to Poirier, over 70 percent of the project costs are secured under fixed-price contracts, so the company can control costs and schedules. He reiterated TC’s commitment to expanding its Mexican portfolio until it reaches 10 percent of the global portfolio. “We will not actually get to that level until we put Southeast Gateway into service and that is scheduled for 2025. So, that gives us time to find partners on Southeast Gateway,” he added.

Regarding the future of the company, Poirier said that it will maintain a focus on safety, operational excellence and executing its industry-leading growth portfolio. He shared TC Energy’s intention to expand, extend and modernize the existing natural gas pipeline network while reducing GHG emission intensity and providing customer-driven low-carbon energy solutions.