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Sempra Sells All Capacity for Proposed LNG Export Site

San Diego-based Sempra Energy filled out its liquefied natural gas (LNG) dance card, announcing late Wednesday that is has inked a third and final commercial development agreement with a subsidiary of GDF Suez SA to develop the final liquefaction train at Sempra's proposed export facility at its Cameron LNG terminal in Hackberry, LA. With this third partner, Sempra officials said they are more than ready for the dance.

Last month, Sempra signed similar agreements with Japanese industrial giants Mitsubishi Corp. and Mitsui & Co. Ltd. to develop and construct the proposed $6 billion liquefaction facilities at Cameron (see Daily GPI, April 18). Under those deals, Sempra would negotiate tolling agreements with the two companies for two-thirds of the facility's projected capacity.

Sempra officials, who were expected to add more details on the deal during a 1Q2012 earnings conference call with financial analysts Thursday, characterized the GDF deal as pushing the company into the next phase of its efforts to have an export business operational from Cameron in 2016.

The agreement calls for GDF Suez taking the final 4 million metric tons per year of LNG from the proposed 12 million metric ton per year facility that expects to turn out the equivalent of 1.7 Bcf/d of LNG. Sempra hopes to start construction of the LNG export facilities by late next year. Mitsubishi and Mitsui signed similar deals, taking 8 million metric tons per year combined.

Like the earlier deals with the Japanese firms, the French-originated GDF agreement binds it to fund all development expenses, including the design, permitting and engineering, as well as to negotiate a 20-year tolling agreement based on agreed-upon terms outlined in the commercial development agreements, according to a Sempra spokesperson.

The liquefaction facility will use Cameron LNG's existing facilities, including two marine berths capable of accommodating Q-Flex sized LNG ships, three LNG storage tanks of 480,000 cubic meters and vaporization capability for regasification services of 1.5 Bcf/d. Sempra said the majority of the new facilities' $6 billion price tag will be project financed with the rest coming from the three project partners in a joint-venture arrangement.

Noting that Sempra was seeking "world-class partners," Octavio M.C. Simoes, Sempra president of LNG operations, said that fully contracting the capacity of the proposed export facility "moves us into the next phase of our plan to develop and construct this project at the Cameron site," which has less than half of its LNG import capacity contracted.

Sempra's E. Scott Chrisman, vice president for Sempra LNG's commercial group, pointed out that Mitsubishi, Mitsui and GDF Suez are all among the largest participants in the global LNG business, and as such, they provide "foundation customers" for Sempra's first attempt at a liquefaction project. The latest deals are "a major milestone" for the project, which still needs federal approvals to build the facility and to export to non-free trade agreement nations, which make up the bulk of the global LNG trade.

In the meantime, earlier Cameron LNG inked an engineering service contract with Foster Wheeler AG for project development, front-end engineering design to support Federal Energy Regulatory Commission applications, and support for engineering/construction contracting. Additionally, the project has retained law firm Morgan Lewis & Bockius LLP as legal counsel on the liquefaction project, and The Royal Bank of Scotland as its financial adviser.

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