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IEnova aims for two major power transmission lines, new marine fuel terminal in Mexico

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Mexico City — The Mexican unit of Sempra Energy, IEnova, is evaluating its participation in government tenders for two major power transmission projects as well as a new marine refined products terminal at the Port of La Paz in Baja California Sur, company officials said Thursday during the company's earnings call.

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Tania Ortiz, IEnova's CEO, said the company is evaluating its participation in a tender for state power utility CFE's 3,000-MW Ixtepec-Yautepec direct transmission line, and a tender led by Mexico's Energy Secretariat (SENER) for the 1,500-MW Hermosillo-Mexicali line.

Bids for the CFE tender are due November 20, and the ruling will be made on December 14. Bids for the SENER-led project is due on February 1 with results being announced on February 20, according to government documents.

IEnova and Canada's Manitoba Hydro are preparing a potential joint bid for the CFE tender, Ortiz said.

"They will have a very small stake in the project. However, Manitoba Hydro brings very strong expertise in the technology required for this type of project," she said.

Both projects are vital pieces to strength Mexico's transmission systems and the addition of new renewable generation capacity. The 600-km Ixtepec-Yautepec line will connect the rich-wind state of Oaxaca with central Mexico while the 500-km Hermosillo-Mexicalli line will connect the state of Baja California for the first time with continental Mexico.

IENOVA'S MEXICO PROJECTS
Project Operational date Offtake company Capacity Status
Solar projects
Prima Q4 2018 DeAcero 110 MW Under construction
Rumorosa Q1 2019 CFE Retail Supply 41 MW Under construction
Tepezala II Q2 2019 CFE Retail Supply 100 MW Under construction
Don Diego H2 2019 Liverpool 125 MW Pre-construction activities
Wind projects
ESJ II Q4 2020 San Diego Gas & Electric Co. 108 MW Pre-construction activities
Refined products terminals
Veracruz marine fuel terminal Q3 2019 Valero 2.1 million barrels Under construction
Fuel storage terminal in Mexico City Q3 2019 Valero 800,000 barrels Under construction
Fuel storage terminal in Puebla Q3 2019 Valero 500,000 barrels Pre-construction activities
Baja Refinados marine fuel terminal H2 2020 BP and Chevron 1 million barrels Pre-construction activities
Topolobampo marine fuel terminal Q4 2020 Marathon Petroleum and Chevron 1 million barrels Engineering and procurement phase
Manzanillo marine fuel terminal Q4 2020 Trafigura 1.5 million barrels Engineering and procurement phase
Gas projects
Sur de Texas - Tuxpan marine pipeline Q4 2018 - Q1 2019 CFEnergia 2.6 Bcf/d Under construction
Energia Costa Azul LNG terminal N/A N/A Up to 2 Bcf/d Waiting for final investment decision in H2 2019
Source: IEnova

REFINED PRODUCTS

IEnova is also considering bidding in November to construct a new fuel marine terminal at La Paz in Baja California Sur, Ortiz said. This would be the third tender IEnova has participated in to build a fuel marine terminal.

IEnova currently has six terminals under construction with a combined capacity of 6.9 million barrels of storage capacity, making the company the largest developer and future operator of terminals in Mexico.

The terminals are needed to handle the increase in refined products imports into Mexico by private companies.

During this last quarter, IEnova announced offtake contracts with Chevron, BP, Trafigura and Marathon Petroleum Corporation for new terminals in Mexico's Pacific coast.

Also, the company is looking for more greenfield projects to develop, Ortiz said.

"Major US and international companies are moving very quickly and contracting new marine terminals," Ortiz said. "We expect this fast growth to continue in the coming year."

Although, after 2019, Ortiz expects this growth will slow down as the opportunity to build large facilities will decrease.

IEnova's 2.6 Bcf/d Sur de Texas-Tuxpan marine pipeline, jointly developed with TransCanada, is expected to be completed by the end of the year or in the first weeks of 2019, Ortiz said. Both companies still have to finish all ties to the pipeline as well as micro-tunnels and complete tests towards commercial operations. How fast all these works will be completed will depend on the weather, she added.

The company will also begin operating its first solar project in Mexico, the 110-MW Prima Solar, during the first weeks of November. The project is fully contracted by steelmaker DeAcero and is the first project developed under a private power purchase agreement in Mexico under the energy reform's wholesale electricity market.

LNG TERMINAL

Regarding the Energia Costa Azul LNG project, IEnova expects to take a final investment decision by H2 2019. Carlos Ruiz Sacristan, IEnova's executive board chairman, said the company is evaluating gas access options to the terminal, including building a new pipeline in Mexico or using unused capacity in the US.

Sacristan said he doesn't expect opposition from the incoming administration of President-elect Andres Manuel Lopez Obrador, adding that the project will help to improve Mexico's energy trade balance.

IEnova increased its adjusted EBITDA by 14% to $238 million in Q3 2018 compared with the same period a year ago. The growth in revenue came primarily to the acquisition of an additional 25% stake a Los Ramones Norte pipeline in November 2017, the company said.

-- Daniel Rodriguez, daniel.rodriguez@spglobal.com

-- Edited by Jeff Mower, newsdesk@spglobal.com