A reworked 20-year liquefied natural gas (LNG) shipment contract between Sempra Energy’s LNG business and a unit of BP plc indicates that more than 90% of the cargoes may be diverted by the Indonesian supplier, according to reports.

Sempra at the end of February told financial analysts that the supplier’s contract had been reworked to accommodate continuing low natural gas prices in the United States, which would allow more cargoes destined for Sempra’s terminal in Mexico to be diverted to higher-paying markets (see Daily GPI, Feb. 29).

At the time Sempra President Mark Snell said it was “a positive for us because we have a guaranteed number of shipments — albeit small — giving us the total amount we need to keep the plant cool, and we’re also allowed to divert a cargo to our other facility in the Gulf [of Mexico], which eliminates the need to buy an expensive cargo there to keep that plant cool.”

The transaction reportedly allows the diversion of up to 54 of 60 anticipated annual shipments to Sempra’s Energia Costa Azul facility in North Baja California, Mexico, which is about 60 miles south of the U.S. border.

A spokeswoman for Sempra LNG told NGI on Sunday that Sempra and Indonesia’s Tangguh Partners have revised the contract further. The original contract as amended remains in place until Aug. 20, 2029. However, Sempra has a confidentiality agreement with Tangguh, and she could not confirm the number of cargoes affected by the revisions.

Sempra indicated that it amended the 20-year contract to allow BP Indonesia more flexibility to divert LNG shipments to higher-paying global markets, particularly those on the Pacific Rim. Snell said the move was intended to help offset the continuing drag from lower natural gas prices and to provide the Indonesian shippers more flexibility in commanding higher prices for the gas.

Sempra’s deal to bring up to 500 MMcf/d of LNG from Indonesia to Costa Azul has always had a provision that allowed up to half of the contract volumes to be diverted in return for payments to Sempra (see Daily GPI, Oct. 13, 2004). The amended contract allows for more volumes to be diverted with revised terms on the payments to Sempra and a guaranteed minimum number of annual shipments to the Mexican receiving terminal, Sempra CFO Joe Householder told analysts in February.

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