Sempra Energy Signs New Mexican LNG Terminal

Sempra Energy, the US group that aims to build a liquefied natural gas (LNG) export facility near Ensenada, Mexico, to serve customers in Asia moved closer to becoming reality as the natural gas utilities holding company  announced agreements with three international firms.

The San Diego-based company announced in a press release that  that its subsidiaries Infraestructura Energetica Nova  (IEnova) and Sempra LNG & Midstream have signed three Heads of Agreements (HOAs) with affiliates of Total, Mitsui & Co. and Tokyo Gas Co. for the full export capacity of Phase 1 of the Energia Costa Azul liquefied natural gas (ECA LNG) project located in Baja California, Mexico.

ECA LNG Phase 1 is a single-train liquefaction facility to be located adjacent to the existing LNG receipt terminal and expected to produce approximately 2.4 million tonnes per annum (Mtpa) of LNG for export to global markets.

"These three HOAs mark a significant milestone for the development of the ECA liquefaction export-project, supporting Sempra Energy (SRE)'s strategic vision of becoming North America's premier energy infrastructure company," said Joseph A. Householder, president and chief operating officer of Sempra Energy.

"We look forward to working with three world-class and well-respected LNG companies to develop a project that should provide low-cost, flexible operations and reliable LNG to the Pacific Basin market and to supply the Baja California peninsula market in Mexico," said Carlos Ruiz Sacristán, CEO of the Sempra North American Infrastructure group and executive chairman of IEnova.

"We are pleased to work with Sempra Energy and IEnova to participate in the development of ECA LNG, which will benefit from synergies with existing infrastructure and from a significant shipping cost advantage for our customers in Asia," said Philippe Sauquet, president of gas, renewables and power for Total S.A.

"We are pleased to work with Sempra Energy and IEnova for ECA LNG, which is another significant milestone to further strengthen the strategic partnership with Sempra LNG and IEnova in a broad range of business opportunities," said Hirotatsu Fujiwara, executive managing officer, chief operating officer of Energy Business Unit II, Mitsui & Co., Ltd.

"Tokyo Gas looks forward to working with the Sempra Energy team to advance the ECA LNG project and to provide the benefits of North American LNG supplies to our customers," said Kentaro Kimoto, managing executive officer, chief executive of the Gas Resources & Energy Production Division of Tokyo Gas.  

The three HOAs for ECA LNG Phase 1 contemplate the parties negotiating and finalizing definitive 20-year LNG sales-and-purchase agreements. The three companies each will potentially purchase approximately 0.8 Mtpa of LNG from ECA LNG Phase 1. A final investment decision for ECA LNG is targeted in late 2019 with potential first LNG deliveries in 2023.

In June, TechnipFMC and Kiewit were selected as the engineering, procurement, construction and commissioning (EPC) contractor for the ECA LNG project, subject to reaching a definitive agreement on the EPC contract.

The ECA LNG receipt terminal was the first LNG receipt terminal constructed on North America's West Coast. Located about 15 miles north of Ensenada, Baja California, it began commercial operations in 2008 and is capable of processing up to 1 billion cubic feet of natural gas per day.

In addition to the ECA LNG Phase 1 and 2 export projects, Sempra Energy is developing Port Arthur LNG export project in Texas and Cameron LNG Phase 1 and 2 export projects in Louisiana. Cameron LNG Phase 1 currently is under construction and Total and Mitsui are two of Sempra Energy's joint-venture partners in the project.

Development of the ECA LNG Phase 1 and 2, Port Arthur LNG and Cameron LNG Phase 2 export projects are subject to a number of risks and uncertainties, including obtaining binding customer commitments, required regulatory approvals and permits, securing financing, completing the required commercial agreements and other factors, as well as reaching a final investment decision.

The ultimate participation of Total, Mitsui and Tokyo Gas in the ECA LNG project remains subject to finalization of definitive agreements, among other factors.