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Sempra Exploring Multiple Deals with Gazprom

Noting it has "three teams" of negotiators talking to Russia's Gazprom, Sempra Energy divulged during a first-quarter earnings conference call Wednesday that it is exploring power generation and energy marketing deals with the gas producer in addition to processing some of its liquefied natural gas (LNG) through one or more North American receiving terminals.

Gazprom is considering equity positions in these potential projects, too, according to Sempra's COO Don Felsinger.

Last week, Sempra's global unit announced it signed a nonbinding memorandum of understanding (MOU) in Moscow with Gazprom to "cooperate in the delivery and associated marketing of LNG in North America." No financial value, terms or volumes of gas were disclosed (see NGI, May 2).

"An MOU and a 'heads-of-agreement' basically accomplish the same thing -- they put you in an audience where you are discussing business opportunities, and we have three teams working with Gazprom," said Felsinger. "One is discussing use of our LNG terminals, which may or may not include an equity contribution by them into either Port Arthur or Cameron, and another team is looking at the opportunities to move that gas to market in North America working with our commodity group.

"In addition, there is a third team looking at generation opportunities as another way to monetize their gas by committing it to gas-fired power plants. We have plants already operating and ones we have planned, and Gazprom would like to better understand what some of the gas-fired generation opportunities might be."

Felsinger said the three different "teams" already have begun working together and he expects some conclusions to be reached in the "next three to six months to see if any one or all three of those make sense for Gazprom and us."

Felsinger and Alexey Miller, Gazprom chairman, signed the MOU April 26 -- a nonbinding agreement characterized by the two parties as contemplating "importing Russian LNG into Sempra LNG's receipt terminals under development in North America and marketing of the natural gas through an arrangement with [Sempra's trading arm] Sempra Commodities."

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