News, Insights and Best Practices for Manufacturing in Mexico

Construction of new pipeline ready to begin in Sonora

21 Oct 2013

Category: Labor & Economics, Manufacturing in Mexico

One of the Mexican government's most important objectives is the improvement of its energy industry, and construction is about to get underway on a new pipeline that would connect Central Mexico with the U.S. According to online news source El Imparcial, Sonora Governor Guillermo Padres and Mexico's Secretary of Energy Pedro Joaquín Coldwell will formally authorize the first phase of a new pipeline, which is set to begin construction at the end of October. The pipeline would increase the country's natural gas imports from the U.S., and El Imparcial reported new industry clusters may develop along the pipeline's route. For U.S. businesses offshoring their production processes to Mexico, the pipeline promises to create yet another cost-savings benefit within the country's low cost manufacturing environment and reduce manufacturing costs even more.

Linking the U.S. and Central Mexico
According to 2B1st Consulting, an oil and gas company, Mexico's production of natural gas has declined in recent years, and the new pipeline will allow Mexico to more efficiently import the resource from the U.S., where natural gas is abundant. Reuters reported the massive pipeline project will be overseen by Mexico's official energy company Petroleos Mexicanos (Pemex), and the first stage of the North-West section of the pipeline will be built by IEnova, formally known as Sempra Mexico. The first length of the pipeline will extend along the border to the town of Los Ramones, according to Reuters. 

While the first phase of the project begins construction, Pemex is experiencing challenges in securing bidding for the second sector of the four-part project. Reuters reported the only bid was declared void because it didn't comply with the $1.8 billion project's technical or economic requirements. 

Once finished, 2B1st Consulting suggested the pipeline will import nearly 1 billion cubic feet of natural gas from the U.S. every day. It will be Pemex's largest infrastructure investment in recent decades.

Creating new opportunities in Mexico 
According to El Imparcial, the pipeline will provide many benefits to not only the Mexican economy but its manufacturing industry. The site reported the pipeline may create more than 75,000 new jobs in Sonora and aid in the development of the region's industries. The influx of natural gas to the region will benefit manufacturers in auto parts and electronics, just to name a few.


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