Sempra Mexico, a unit of San Diego based Sempra Energy, was awarded two contracts to build, own and operate 500 miles of natural gas pipeline in the Mexican states of Sonora and Sinaloa by the Comision Federal de Electricidad (CFE), Mexico’s state owned electric utility.

Sempra said it was selected for the contracts, estimated at $1 billion, after a competitive and transparent process. The network will be composed of two segments that will connect to the U.S. interstate pipeline system in Arizona and provide natural gas to new and existing CFE power plants in Mexico that currently burn fuel oil.

The gas network is made up of a 310-mile pipeline from Sasabe, south of Tucson, Ariz., to Guaymas, Sonora, which will have the daily capacity of 770 million cubic feet of gas; and a 200-mile segment from Guaymas to El Oro, Sinaloa, which will have the daily capacity of 510 million cubic feet of natural gas, Sempra said.

The first segment of the network, from Arizona to Guaymas, is expected to begin operating in late 2014. The second segment should begin operating in the third quarter of 2016, Sempra said.

Sempra Mexico is a wholly owned subsidiary and part of Sempra International, which is one of four operating divisions of Sempra Energy, the Fortune 500 energy services holding company with 2011 revenue of $10 billion, and about 17,500 employees.