Canada's ATCO Transfers Unfinished Pipeline Ownership to Mexico After $100M Damages Award

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Canada's ATCO Transfers Unfinished Pipeline Ownership to Mexico After $100M Damages Award

Fri, 03/31/2023 - 10:53
Flags of Canada and Mexico (© Shutterstock/ruskpp)
Flags of Canada and Mexico (© Shutterstock/ruskpp)

Canada's ATCO Ltd has agreed to transfer ownership of an unfinished natural gas pipeline in Mexico to the Mexican government after a dispute with the country's state power company, Reuters reported on Thursday, March 30, 2023.

According to two officials who spoke with Reuters, the agreement marks a rare breakthrough in ongoing tensions over energy between the two countries.

In 2021, Mexican power utility Comision Federal de Electricidad (CFE) was ordered to pay ATCO around $100 million in damages, interest, and legal fees for the stalled Ramal Tula pipeline in the state of Hidalgo, further crippling the pipeline project.

The decision to transfer ownership was made after Lopez Obrador met with Canadian Prime Minister Justin Trudeau in January, where Trudeau raised concerns about Canadian energy firms in Mexico, leading to a meeting between Lopez Obrador and representatives from Canadian energy companies, including ATCO.

The transfer details were finalized in late February with no transfer fee involved after Lopez Obrador met representatives, two sources privy to the deal told Reuters, underscoring the commitment to the agreement made by the two North American leaders.

Handing over the pipeline will relieve ATCO of any related liabilities and allow Mexican President Andres Manuel Lopez Obrador to complete the project, which was designed to supply natural gas to a power station north of Mexico City.

This mutually beneficial agreement contrasts unresolved dispute settlement talks between the US and Canada against Mexico over Lopez Obrador's energy policies.

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