Regional LNG: S&P mulling credit risks of Sempra Energy's LNG facilities

Standard & Poor's said that its credit ratings for Sempra Energy could change once the structure of the San Diego, California-based company's emerging liquefied natural gas (LNG) business is known, Platts reported Friday.

Sempra has planned two major LNG facilities -- the $500-mil Costa Azul project in Baja California and the $700-mil Cameron Project near Lakes Charles, Louisiana.

The final risks to Sempra depends on how it contracts the regasification capacity, the credit quality and risks inherent in its ultimate LNG supplier and, most importantly, its wholesale gas market exposure, S&P noted.

Sempra's credit ratings (BBB+) currently assigned by S&P do not reflect the LNG business, but if the facilities are built, their operations will be rolled into the rest of Sempra's operations for ratings purposes, the ratings firm said.

"The resulting business and financial risk profiles would determine the credit quality of all entities in the Sempra family," said S&P.

At the end of 2003, Indonesia's Upstream Regulatory Body BPMIGAS signed a preliminary contract with Sempra to supply the latter's proposed LNG terminal in Baja California with some 3.7 million tons of LNG starting in 2007 for a period of twenty years. (*)