TransCanada has been selected to construct, own and operate the Tula–Villa de Reyes natural gas pipeline in Mexico.

Estimated to cost about $550m, the 36-inch diameter, 420km pipeline will start at Tula in the state of Hidalgo, and go up to Villa de Reyes, in the state of San Luis Potosí.

It will be used to transport natural gas to power generation facilities in the central region of the country. The new pipeline will be linked with TransCanada's Tamazunchale and Tuxpan–Tula pipelines, as well as with other transporters in the region.

With the Tula–Villa de Reyes pipeline, TransCanada will be operating six natural gas pipeline systems in Mexico representing an overall investment of about $3.6bn.

Mexico's state-owned power company Comisión Federal de Electricidad (CFE) will aid the construction of the pipeline with a 25-year natural gas transportation service contract for 886m cubic feet per day.

Tula–Villa de Reyes pipeline is slated to be operational by early 2018.

TransCanada president and CEO Russ Girling said: "The Tula–Villa de Reyes Pipeline complements our existing pipeline network in Mexico and furthers our strategy of owning and operating highly contracted and regulated assets that generate stable and predictable earnings and cash flow streams."