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Sempra Expands South of the Border

Sempra Expands South of the Border

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

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

"The La Laguna-Durango project solidifies our position in the Mexican energy market and fits perfectly with our strategy of becoming the No. 1 privately owned, fully integrated provider of energy services in northern Mexico," said Donald E. Felsinger, Sempra Energy group president, unregulated affiliates. "We have demonstrated our ability to build, design and operate successful energy projects in Mexicali, Chihuahua and Rosarito. This latest natural gas distribution system will extend our reach to a total of over 125,000 Mexican customers within the next five years."

As part of its license, Sempra Energy International will acquire about 27 miles of existing steel transmission pipeline for $7.8 million from Pemex, Mexico's state-owned oil company. This pipeline currently serves 22 industrial customers with 14 MMcf/d. The U.S. company is expected to take over operations of the pipeline June 21.

The La Laguna-Durango system is linked to the same transmission pipeline 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 of Mexico and the United States become more intertwined, we look forward to providing fully integrated energy solutions to even more customers in northern Mexico." The geographic zone of La Laguna-Durango has a population of about 1.1 million and is home to several energy-intensive industries, such as metallurgy, foodstuffs, textiles and timber harvesting.

Sempra Energy International currently is a partner in three other energy projects in Mexico: a gas distribution system in Mexicali, Baja California, that will reach 25,000 customers by 2002; a similar system in the state of Chihuahua that will reach 50,000 customers by 2002; and a 10-year agreement with the Mexican Federal Electric Commission to build a 23-mile pipeline and supply gas to the Presidente Juarez Power Plant in Rosarito, Baja California.

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