Canadian pipeline company TransCanada sees Mexico ripe for future investment after landing deal to build a gas pipeline across the country. Photo by Jim Parkin/Shutterstock

CALGARY, Alberta, Nov. 12 (UPI) -- Pipeline company TransCanada said it will expand its footprint in the Mexican energy sector by building a 155-mile natural gas pipeline in the center of the country.

Supported by a 25-year service contract from state-run Federal Electricity Commission, the company said it was chosen to build, own and operate the planned 155-mile Tuxpan-Tula gas pipeline.


"The Tuxpan-Tula pipeline demonstrates our continued commitment to developing Mexico's energy infrastructure to meet the need for increased natural gas supply," Russ Girling, TransCanada's president and chief executive officer, said in a statement.

Considered healthy, the Mexican economy last year posted a growth in gross domestic product of 2.1 percent and an inflation rate of 4 percent, according to the World Bank. National data show growth momentum continued in the third quarter, with the economy expanding 2.4 percent year-on-year.

While Mexico has a relative abundance of domestic natural gas reserves, development is slow and the country is a net importer of natural gas, mostly through pipelines from the United States.

TransCanada said it expects to invest about $500 million on the gas pipeline meant to service markets in central and western Mexico. Construction is slated to begin next year and the pipeline will start operating in late 2017.

"By 2018, with the Tuxpan-Tula pipeline, TransCanada will have five major pipeline systems, with approximately $3 billion invested in Mexico," the company said. "We will continue to pursue additional opportunities for new energy infrastructure projects in Mexico going forward."

The contract for the Mexican gas pipeline comes nearly one week to the day after the U.S. government denied TransCanada's permit to build the cross-border Keystone XL oil pipeline meant to send oil to southern U.S. refineries.