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Sempra Clarifies Interest in U.S. Liquefaction Project

Sempra Energy is one of many U.S. liquefied natural gas (LNG) terminal operators weighing its options for exporting domestic supplies as LNG given North America's relatively bargain prices for gas compared to Europe and Asia. The LNG unit for the San Diego-based energy holding company said Tuesday it would seek a partner to share the market risks of a liquefaction project.

Earlier this year Sempra LNG CEO Darcel Hulse said the current pricing conundrum was causing "some unique challenges" for LNG operators in the United States and elsewhere (see Daily GPI, March 25). The sustained differential between North America and the rest of the world historically has not been sustained, and global gas prices have tended to track closer together, Hulse said.

Whether the difference will remain is at the heart of what, if anything, that Sempra LNG eventually does with development of a liquefaction facility at its Cameron LNG receiving terminal in Louisiana.

Similar to what Hulse told Wall Street analysts last March, a Sempra LNG spokesperson said Tuesday in response to a financial wire service report on Sempra's liquefaction plans that building such a U.S.-based facility "for exportation of natural gas only makes sense if prices in the United States remain significantly lower than [those in] Europe or Asia for the long term."

She added that Sempra would consider building a liquefaction project as long as a partner or customers were "willing to shoulder the market risks."

Sempra's spokesperson reiterated to NGI that the company did not make any proactive statements or announcement on its liquefaction plans, ideas or intentions, but rather was contacted by a Reuters News Service reporter regarding an "export plant in Louisiana."

Speaking at Sempra's financial analysts conference in New York City last March, Hulse noted that Sempra does not have authorization to export multiple cargoes out of its second LNG receiving terminal on North Baja California's Pacific Coast in Mexico. He said with limited authorization from Mexican authorities there was a one-time export completed "with great success," involving a cargo swap between the Atlantic and Pacific Basins. He called it a "unique opportunity" that Sempra intends to repeat.

Earlier this year Sempra obtained the Federal Energy Regulatory Commission's approval to re-export LNG shipments from its Cameron terminal (see Daily GPI, March 4).

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