Sempra Energy LNG inked a letter of intent with BPMigas, Indonesia’s executive agency for oil and gas, and BP Indonesia Thursday to purchase liquefied natural gas (LNG) supplies from Indonesia to be delivered to its planned terminal in North Baja California, Mexico. Top government energy officials from Mexico, Indonesia and the U.S. endorsed the agreement which was signed near the end of the two-day LNG Ministerial Summit in Washington, DC, last week.
U.S. Energy Secretary Spencer Abraham applauded the efforts of BP and Sempra to bring new supplies to North America. Indonesia’s Energy Minister, Dr. Purnomo Yusgiantoro, said “Indonesia has the gas, Mexico has the place and the U.S. has the customers.” Mexico’s Energy Minister Filipe Calderon noted the political pact he signed with Indonesia allowing the commercial agreement to go forward was evidence “the Mexican government will support the project of any company that wants to invest in our country.”
The deal signed by Sempra, BPMigas and BP Indonesia was seen as the first step towards a 20-year purchase/supply arrangement with index-based pricing.
The agreement calls for 1.7 million tons of LNG to be delivered annually (equal to 600 MMcf/d ) beginning in 2007 from Indonesia to Sempra Energy’s planned LNG import and regasification terminal near Ensenada, Baja California. The proposed $600 million project, which is targeted for in-service in 2007, would have the capability to import and process 1 Bcf/d of gas for expanding power generation markets in northern Mexico and Southern California.
Sempra Energy received environmental clearance for its planned LNG facilities near Ensenada from Mexico’s national environmental agency last April. It was the first environmental and risk-assessment permit issued for an LNG project in Baja California and the first LNG permit awarded on the Pacific Coast.
The Tangguh LNG liquefaction project in Indonesia, which is targeting a two-train start-up, will supply the LNG. The project is being constructed by a consortium led by BP Indonesia, which has a 37.16% stake as a contractor to BPMigas. It already has an LNG sales contract for 2. 7 million tons a year for the Fujian LNG project in China starting in 2007 and is the preferred supplier for 1.1 million tons annually to South Korea. Much of the gas will come from Tangguh fields in Indonesia.
“This strategic and timely relationship brings together the Republic of Indonesia, the world’s leading LNG producer [BP], and the Tangguh facility in bringing abundant LNG supplies to the first major LNG facility along North America’s West Coast [Sempra Energy],” said Donald E. Felsinger, group president of Sempra Energy Global Enterprises, which oversees Sempra Energy LNG Corp. By 2007, he noted that Sempra Energy expects to have two new LNG terminals operating in North America.
Sempra Energy LNG said it was currently pursuing supply and capacity agreements for its proposed $700 million Cameron LNG project near Lake Charles, LA. The proposed facility will be capable of processing 1.5 Bcf/d of gas.
“This is an excellent outcome for our LNG industry and positions Indonesia as the first mover in agreeing [to supply] the West Coast markets of North America,” noted Indonesia’s energy minister.
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