21 | OCT | 2019
Mexico settles last deal on gas pipelines dispute
Mexico’s government had already reached deals with 5 firms – Photo: Xavier Omaña/EL UNIVERSAL

Mexico settles last deal on gas pipelines dispute

12/09/2019
18:00
Newsroom & Agencies
Mexico City
Daina Beth Solomon, Miguel Ángel López, Dave Graham, Susan Fenton & David Gregorio/REUTERS & Alberto Morales, Misael Zavala/EL UNIVERSAL
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Mexico-based Fermaca was the only company left to reach an agreement on the government’s renegotiation of seven gas pipeline contracts awarded under the previous administration

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On Wednesday, Mexican President Andrés Manuel López Obrador said Mexico’s government had reached a deal with infrastructure firm Fermaca in its renegotiation of natural gas pipeline contracts signed under the last government.

“It’s progress for various reasons, firstly because we avoided bringing the conflict to international courts, and secondly because the contracts are being fulfilled,” López Obrador told during his regular morning news conference.

Mexico-based Fermaca was the only company yet to agree terms in the government’s renegotiation of seven gas pipeline contracts awarded under the previous administration, the initial details of which were announced two weeks ago.

López Obrador said reworking the deals would save taxpayers USD $4.5 billion in total. Critics argue the renegotiation sets a worrying precedent and may discourage investment in Mexico due to uncertainty about how contracts will be treated in the future.

On August 27, the State power utility, the Federal Electricity Commission (CFE), said the initial accords had saved USD $3.74 billion.
 

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Speaking alongside López Obrador, the head of the CFE, Manuel Bartlett, said the deal with Fermaca to lower transportation rates would generate savings of USD $672 million.

Other companies affected by the overall renegotiation include Canada’s TC Energy Corp, Mexico’s Grupo Carso, a company controlled by billionaire magnate Carlos Slim, and IEnova, a Mexican unit of U.S. business Sempra Energy.

For its parts, Fermaca will invest MXN $12 billion to expand its network of gas pipelines to distribute gas to southern and southeastern Mexico.
 

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Fernando Calvillo, president of Fermaca’s Board, added that during the last 15 years, the company has invested USD $3.5 billion in its gas pipelines in Mexico. Fermaca’s network comprises 2,150 km from Texas.

Manuel Bartlett, director of the CFE, explained that the deal with Fermaca was reached last September 6, after four work meetings. In addition, he said that, opposite to what the media says, they achieved a negotiation of 10 extra years of natural gas transport.

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