Mexico's Urzua Optimistic on Solving Pipeline Dispute

(Bloomberg) -- Mexico's Finance Minster, Carlos Manuel Urzua, expressed optimism about a prompt solution of the dispute over the construction of a pipeline by Infraestructura Energetica Nova SAB, a unit of a U.S. company, and Canada's TC Energy Corp.

Urzua met on the sidelines of G-20 meeting in Osaka, Japan, with Canada's Finance Minister, Bill Morneau, and discussed the issue. “We hope the problem will be solved very soon,” Urzua told reporters in a video-conference, adding he's hopeful “no international arbitration will be needed, and simply an agreement can be reached between the parties.”

Urzua said Morneau expressed his concern over a pipeline project halted by Mexico's Federal Electricity Commission on June 26. The government agency filed an arbitration request for the companies to refund capacity fees they paid while the project was delayed because of force majeure events, according to a joint statement from TC Energy and IEnova, a subsidiary of Sempra's Energy.

The arbitration process would likely delay the start up of the $2.5 billion Sur de Texas-Tuxpan pipeline, which will provide capacity to transport 2.6b cubic feet a day of natural gas.

Mexico's President Andres Manuel Lopez Obrador said Thursday the government is seeking to reach an agreement with several companies regarding gas pipeline contracts that he considers take advantage of state utility, CFE. He said discussion on gas pipeline contracts does not pose threat to U.S.-Mexico-Canada Agreement, or USMCA.

--With assistance from Eric Martin.

To contact the reporter on this story: Jose Enrique Arrioja in New York at jarrioja@bloomberg.net

To contact the editors responsible for this story: Jose Enrique Arrioja at jarrioja@bloomberg.net, Ian Fisher

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