August 27, 2019 / 4:57 PM / 2 months ago

Shares in Mexico's IEnova rise almost 7% after pipeline deal

MEXICO CITY, Aug 27 (Reuters) - Shares in Mexican infrastructure company IEnova, a unit of U.S. company Sempra Energy, rose by nearly 7% on Tuesday after it reached a deal over a natural gas pipeline after a dispute with Mexico’s government that could extend two of its contracts for 10 years.

Shares in IEnova jumped 6.9% after news of the deal negotiated between the state-run power utility Federal Electricity Commission (CFE) and various companies over several natural gas pipeline deals signed under the last government.

IEnova’s stock later pared part of the gains.

“This agreement establishes a new tariff structure and considers a 10-year extension for both contracts,” IEnova said, referring to the marine pipeline that runs between Texas and the port of Tuxpan, which it developed with Canada’s TC Energy , and the Guaymas El Oro pipeline in northern Mexico.

“CFE has committed to provide support to resume operations in the Guaymas El Oro pipeline, as well as the commitment for the immediate start of commercial operations of the Sur de Texas Tuxpan marine pipeline,” said IEnova.

The CFE deal reworks the terms of pipeline contracts signed between the previous administration and will eventually save the government $4.5 billion as what Mexico pays the firms to transport natural gas is reduced.

The $2.5 billion Sur de Texas pipeline was completed in June and is part of the biggest gas pipeline between Mexico and the United States and will increase Mexico’s capacity to import cheap U.S. gas by about 40% percent.

The 480-mile (770-kilometer) pipeline, which mostly runs underwater in the Gulf of Mexico, is the Mexican half of a project designed to deliver 2.6 billion cubic feet per day (bcfd). (Reporting by Anthony Esposito Editing by Marguerita Choy)

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