Sempra Energy, Shell plan Mexican LNG receiving terminal

By OGJ editors

HOUSTON, Dec. 22 -- Shell International Gas Ltd. and Sempra Energy LNG Corp.—the newest subsidiary of Sempra Energy Global Enterprises—Monday reported they will combine two separately proposed Baja California LNG receiving terminals into a single project—Energia Costa Azul—"significantly reducing the impact on the local environment."

The two companies are forming a 50:50 joint venture to build, own, and operate a $600 million LNG receiving terminal in Costa Azul 14 miles north of Ensenada on Mexico's west coast. The terminal will be capable of supplying 1 bcfd of natural gas.

Shell and Sempra Energy LNG equally will share expenses involved in the undertaking and will each take 50% of the capacity in the terminal. About 500 MMcfd of the terminal's natural gas will be used to meet growing energy demands in western Mexico, and the balance will be marketed in the southwestern US.

Construction is planned to begin in mid-2004 with terminal operations starting up in 2007.

Sempra had signed an agreement Dec. 18 for Indonesia and BP PLC to supply 500 MMcfd of LNG from BP-operated Tangguh field in Papua, Indonesia to an LNG terminal on the West Coast for 20 years (OGJ Online, Dec. 19, 2003).

Shell Gas & Power originally had planed a 7.5 million tonne/year LNG import terminal in Costa Azul at a point 23 km north of Ensenada (OGJ Online, Aug. 6, 2003). It said in August that terminal permitting activities with the Mexican authorities were "well advanced."

"The decision to combine and develop a single successful project in Baja California blends the permitting, technical, and logistical expertise required to get this project underway," said Donald E. Felsinger, group president, Sempra Energy Global Enterprises."

Peter Kidd, chairman of Shell's Mexico operations, said: "This joint venture will unite the strengths of the two companies. Shell is the world's largest private producer of LNG, with interests in six projects globally and is a world leader in LNG technology. Our leadership in LNG, combined with Sempra Energy's experience and well-established natural gas infrastructure in Mexico, is the making of a strong joint venture."

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