Regional LNG: Sempra, Shell announce new capacity agreement for Mexican LNG terminal

Shell International Gas Limited (Shell) and Sempra Energy LNG, a subsidiary of Sempra Energy, on Thursday announced a 20-year agreement that provides Shell with half the initial capacity of the Energia Costa Azul liquefied natural gas (LNG) regasification terminal in Baja California, Mexico. The agreement also gives Shell rights to half of any capacity additions as the project expands in the future.

Under the agreement, Sempra Energy LNG will own, construct and operate the terminal, which initially will have processing capacity of 1 billion cubic feet (Bcf) per day (7.5 million tonnes per year) of natural gas.

When it becomes fully operational in 2008, the Energia Costa Azul regasification terminal, located approximately 14 miles north of Ensenada, Mexico, will be the first LNG project on North America's West Coast. It will help Baja California, Mexico, meet its long-term energy needs, providing, at the same time, an outlet to the U.S. market for excess capacity.

On Oct. 12, Sempra Energy LNG announced a supply agreement with BP and its Tangguh LNG partners for the supply of 3.7 million tonnes of LNG per year, (500 million Bcf/day) from Indonesia to Energia Costa Azul.

LNG supply for the Shell capacity will come from the Sakhalin II project in eastern Russia, where Shell is the largest shareholder. ``This is a landmark deal in many ways that is testament to the truly global nature of the LNG industry. For the first time, LNG from Russia will supply Mexico and California. This is good news for Mexico's energy supply and a significant step in bringing LNG into the North American West Coast," a Shell executive said.(alex)