SAN DIEGO, Oct. 12, 2004 (PRIMEZONE) -- Sempra Energy LNG, a subsidiary of Sempra Energy (NYSE:SRE), today announced it has signed a sales and purchase agreement with BP and its Tangguh LNG partners for the supply of 3.7 million tonnes of liquefied natural gas (LNG) per year, the equivalent of 500 million cubic feet of natural gas a day.
The LNG will be shipped from Indonesia's Tangguh LNG liquefaction terminal to the Energia Costa Azul LNG receipt terminal in Baja California, Mexico.
The agreement enables the further development of the first new LNG receipt terminal along North America's West Coast, while allowing a new LNG supply project to move forward in Indonesia.
The 20-year sales and purchase agreement, which provides for pricing tied to the SoCal border index for natural gas, will cover half the capacity of the Energia Costa Azul receipt facility. In its initial phase, the terminal has a total gas processing capacity of 1 billion cubic feet per day.
Sempra Energy LNG expects the first cargos of LNG under the agreement to arrive in 2008.
"This agreement represents another significant milestone in the development of our North American LNG business, ensuring additional stable revenue streams for Sempra Energy in the future," said Donald E. Felsinger, president and chief operating officer of Sempra Energy. "The natural gas derived from the Tangguh facility is ideally suited for the Mexican and U.S. marketplace and will help put downward pressure on gas prices while boosting energy reliability in the region."
Construction contracts for the Energia Costa Azul receipt terminal are expected to be signed by the end of the year with operations starting in early 2008. The facility will be constructed and operated in accordance with Mexican and international safety standards. These standards meet or exceed most U.S. requirements.
"This agreement is flexible, offering the Tangguh Partners specified diversion rights, in exchange for appropriate compensation for all cargoes diverted," said Darcel Hulse, president of Sempra Energy LNG. "LNG from Tangguh is a perfect match for Energia Costa Azul, because the gas meets the region's stringent gas-quality standards without requiring further processing or modification."
Vivienne Cox, chief executive of BP's Gas, Power & Renewables division said: "This agreement secures value for Indonesia's gas resources and connects gas users in Mexico and the United States to a significant new supply source."
BP Plc is one of the world's largest energy companies and is the largest stakeholder in the $5 billion Tangguh LNG facility partnership.
LNG is natural gas that has been cooled to minus 260 degrees Fahrenheit (or minus 162 degrees Centigrade) and is condensed into a liquid that is stored at close to atmospheric pressure. LNG occupies 600 times less space than in its gas form, which allows it to be transported in ships from remote locations to markets where it is needed. At the receiving terminal, LNG is unloaded and stored until it is regasified and moved via pipeline to customers.
Sempra Energy LNG also is developing LNG receipt terminals in Lake Charles, La., and Port Arthur, Texas.
Sempra Energy LNG is a subsidiary of Sempra Energy. Sempra Energy, based in San Diego, is a Fortune 500 energy services holding company with 2003 revenues of $7.9 billion. The Sempra Energy companies' 13,000 employees serve more than 10 million customers in the United States, Europe, Canada, Mexico, South America and Asia.
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