Sempra Inks Huge Mexcian Gas Supply Deal
A new era of natural gas playing a significant role in Mexico's
western Baja Peninsula was launched last week with the completion
of Sempra Energy's 10-year deal worth close to $1 billion to supply
up to 300 MMcf/d to fuel new and converted Mexican power plants at
Rosarito Beach in Baja, beginning in December 1999.
Sempra's gas supplies will fuel one of Mexico's new 450 MW
electric generation plants, along with two existing oil-fired units
totaling 680 MW that will be converted. Eventually a total
generating load of 1,500 MW could be served in the coastal area 23
miles south of the U.S. border. The project will require Sempra to
finance a 30-inch diameter transmission pipeline from the U.S.
border to service the power plant in partnership with a Mexican
company, Proxima Gas, which will build and operate the pipeline.
"The key to this deal is our ability to put together an
integrated package with one price for delivery of the gas to the
power plant's door," said a San Diego-based Sempra spokesperson.
"The pipeline is an added plus since Baja is isolated from mainland
Mexico energy grids and has historically had no gas
infrastructure." Sempra has long coveted this project because it
carries the potential for supplying other plants and the growing
industrial load along the U.S.-Mexico border and the general border
cities of Tijuana and Mexicali, among others. It expects to be an
aggressive bidder for the development of new gas distribution
systems in the nearby border cities of Tijuana, Tecate and
Ensenada, which Mexico's national energy commission has indicated
it will hold bidding on in the near future.
There was no competition for Sempra to supply the power plants;
other U.S. firms that had expressed earlier interest dropped out,
according to the Sempra spokesperson, noting that Sempra still had
to satisfy the Mexican government's requirements to win the bid.
"We are pleased to deliver this kind of integrated energy
solution to help (Mexico) meet its rising energy needs of Baja
California's businesses and residents," said Stephen L. Baum,
Sempra's vice chairman, president and COO, noting that the project
is a "first" for the newly merged energy services company that was
created in July by the merging of the parent companies of San Diego
Gas and Electric Co. and Southern California Gas Co.
Two of its unregulated utility affiliated companies, Sempra
Energy International and Sempra Energy Trading, are involved in the
Baja project. Sempra has no interest in competing to develop the
new power generation plants in Baja, but it does-through its
SDG&E utility operations-transport bulk power in periods of peak
demand south of the border. Through other Baja projects begun
earlier, Sempra is serving about 2,000 residential gas customers in
Chihuahua and 33 industrial gas customers in Mexicali, while it
continues to develop new distribution pipeline systems in both
cities. Some residential customers in Mexicali are now being
served, too, according to a spokesperson.
Expectations among Sempra's leaders are that Baja's recent
booming energy growth will continue to feed the growing
industrialization by international firms along the
California-Mexico border, although most of these projections don't
factor in the current international economic downturn spurred by
the Asian and Russian financial crises.
Sempra International develops, operates and invests in energy
infrastructure projects, including natural gas distribution systems
and power generation facilities, outside the U.S. It currently has
gas distribution partnerships in Argentina and Uruguay, in addition
Richard Nemec, Los Angeles