Sempra & Shell to Develop Mexican LNG Terminal

Shell International Gas Limited and Sempra Energy LNG Corp. intend to form a 50/50 joint venture to build, own and operate a $600 million liquefied natural gas (LNG) receiving terminal in Baja California, Mexico.

The terminal is to be located in Costa Azul on the west coast of Mexico, approximately 14 miles north of Ensenada and will be capable of supplying 1 billion cubic feet (Bcf) of natural gas per day. Shell and Sempra Energy LNG Corp. will share the investment costs of the terminal equally and each will take 50 percent of the capacity in the terminal. Approximately 500 million cubic feet per day of natural gas from the terminal will be used to meet the growing energy demands in western Mexico. Any surplus gas from the facility will be used to provide new gas supplies for the southwestern United States.

The proposed joint venture will combine the two separate Baja California LNG receiving terminals proposed by Shell and Sempra Energy LNG Corp. into a single project, significantly reducing the impact on the local environment. It is expected that construction will begin in mid-2004 with terminal operations beginning in 2007. The terminal will be constructed and operated in accordance with all applicable local and international safety standards.

"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. "We also want to assure our neighbors in Ensenada and Baja California that both Shell and Sempra Energy LNG Corp. will continue to develop this project with the needs of the community in mind and we will work to be good corporate neighbors for generations to come."

Shell Mexico Country Chairman Peter Kidd 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. The decision also reinforces Shell's commitment to Mexico through the continued promotion of sustainable businesses that add value to the energy sector."

LNG is natural gas that has been cooled below minus 260 degrees Fahrenheit (minus 162 degrees Celsius) and condensed into a liquid. LNG occupies 600 times less space than in its gaseous state, which allows it to be shipped in cryogenic tankers from remote locations to markets where it is needed. At the receiving terminal, LNG is unloaded and stored until it can be vaporized back into natural gas and moved via pipeline to customers.

In addition to Energia Costa Azul, Sempra Energy LNG Corp. also is developing an LNG receiving terminal, Cameron LNG, near Lake Charles, La.