TransCanada has won a contract to build, own and operate a $500 million US natural gas pipeline for Mexico's state-owned power company. 

The Calgary-based company says the Tuxpan-Tula Pipeline will help meet Mexico's increasing demand for natural gas as the country shifts to the cleaner-burning fuel.

The company says the pipeline should be completed by late 2017 and it has a 25-year contract with the Comision Federal de Electricidad to operate the line.

The 250-kilometre pipeline will run from the state of Veracruz to natural gas power plants in central and western Mexico, supplying up to 886 million cubic feet of gas a day.

TransCanada already owns and operates the Tamazunchale and Guadalajara pipeline systems in Mexico and is working to complete the Topolobampo and Mazatlan pipelines.

By 2018, the company says it will have invested about $3 billion US in the country and continues to look for more opportunities in Mexico.