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Mexico settles dispute with private gas pipeline firms

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Christian Fernsby ▼ | August 28, 2019
The Mexican government has resolved its dispute with private companies over what it considered to be abusive contracts for natural gas pipelines, President Andres Manuel Lopez Obrador said on Tuesday.
Andres Manuel Lopez Obrador
LatAm   Andres Manuel Lopez Obrador
The agreement avoided a lawsuit in international courts stemming from existing pipeline construction and operation contracts, and will save the government 4.5 billion U.S. dollars, said Lopez Obrador, who took office in December.

Topics: Mexico pipeline gas

"There was a dispute from the start of our administration about the costs to the nation of this type of gas delivery service. We called on business owners to work towards an agreement," Lopez Obrador said at a press conference attended by business leaders.

The government-run Federal Electricity Commission started arbitration proceedings in June with Mexican companies Grupo Carso, IEnova and Fermaca, and Canadian company TC Energy.

The agreement will allow the state-run electric power company to commercialize about 8.2 billion cubic feet of natural gas per day, of which 63 percent will be used by the company's power plants, and 37 percent will be allocated to national industry.

"This is going to benefit the consumers because we won't have to increase the price of electric power," the president said.

The contracts that the current government deemed bloated and unfair were signed by the country's previous administration.