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Pemex signed energy contracts for US1.4 billion, including the Canadian Atco Ltd.

Pemex signed energy contracts for US1.4 billion, including the Canadian Atco Ltd.

Posted by Ricardo Vázquez on October 27, 2014

Pemex, Mexico's state-owned oil company, said on Monday it has signed two preliminary power plant deals worth US$1.4 billion to supply electricity to two of the country's refineries.

The memorandums of understanding with Japanese trading house Mitsui & Co. Ltd. and Canada's Atco Ltd. and its Mexican partner Grupo Hermes call for co-generation power plants that will begin commercial operation during the second half of 2017.

Pemex's partnership with Grupo Hermes-Atco aims to produce 638 megawatts of electricity from the new natural gas plant that will also produce 1,247 tons of steam per hour for power generation, with an estimated investment of US$820 million.

The electricity produced from the plant will supply Pemex's Miguel Hidalgo refinery in Tula, in the central state of Hidalgo.

Meanwhile, the partnership with Mitsui contemplates a 380-megawatt natural gas plant to produce an estimated 760 tons of steam per hour for power generation, with an estimated investment of US$590 million.

The Mitsui plant will supply electricity to the Hector R. Lara Sosa refinery in Cadereyta, in the northern state of Nuevo León.

Pemex officials said any excess power not needed by the two refineries will be sold over Mexico's national grid.

The projects are among eight co-generation projects in which Pemex will seek private partners by 2018.

Alejandro Martínez, head of Pemex Gas and Basic Petrochemicals, said the Mexican oil giant will maintain a minority stake of between 11 and 30% in the plants.

Both projects, announced on Monday, will be funded entirely by private investment, said Ramón Torres, Hermes' top energy executive.

Earlier this month, Atco said it won a contract from CFE, Mexico's national power company, worth YS$50 million to build and operate a natural gas pipeline near Tula, marking Atco's first energy infrastructure project in Mexico. Atco also has operations in Canada and Australia.

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