The Mexican Energy Regulatory Commission (CRE) awarded thelicense to build and operate a gas distribution system in the LaLaguna-Durango geographic zone in north-central Mexico toDistribuidora de Gas Natural de La Laguna-Durango S. de R.L. deC.V. (DGN), wholly owned by San Diego-based Sempra EnergyInternational.

The La Laguna-Durango distribution system will span two Mexicanstates, serving the city of Torreon in the state of Coahuila, andthe cities of Gomez Palacio, Lerdo and Victoria de Durango in thestate of Durango. Sempra Energy International will invest more than$40 million in the project to reach 50,000 customers by the fifthyear of operation.

“The La Laguna-Durango project solidifies our position in theMexican energy market and fits perfectly with our strategy ofbecoming the No. 1 privately owned, fully integrated provider ofenergy services in northern Mexico,” said Donald E. Felsinger,Sempra Energy group president, unregulated affiliates. “We havedemonstrated our ability to build, design and operate successfulenergy projects in Mexicali, Chihuahua and Rosarito. This latestnatural gas distribution system will extend our reach to a total ofover 125,000 Mexican customers within the next five years.”

As part of its license, Sempra Energy International will acquireabout 27 miles of existing steel transmission pipeline for $7.8million from Pemex, Mexico’s state-owned oil company. This pipelinecurrently serves 22 industrial customers with 14 MMcf/d. The U.S.company is expected to take over operations of the pipeline June21.

The La Laguna-Durango system is linked to the same transmissionpipeline that serves Sempra’s distribution system in Chihuahua,with access to gas supplies from the United States.

“As Mexican energy demand increases, and the energy markets ofMexico and the United States become more intertwined, we lookforward to providing fully integrated energy solutions to even morecustomers in northern Mexico.” The geographic zone of LaLaguna-Durango has a population of about 1.1 million and is home toseveral energy-intensive industries, such as metallurgy,foodstuffs, textiles and timber harvesting.

Sempra Energy International currently is a partner in threeother energy projects in Mexico: a gas distribution system inMexicali, Baja California, that will reach 25,000 customers by2002; a similar system in the state of Chihuahua that will reach50,000 customers by 2002; and a 10-year agreement with the MexicanFederal Electric Commission to build a 23-mile pipeline and supplygas to the Presidente Juarez Power Plant in Rosarito, BajaCalifornia.

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