With declines in quarterly earnings but stronger results in trading and international businesses, San Diego-based Sempra Energy officials said Thursday they consider their company “ahead of the competition” to be the next major developer/operator of liquefied natural gas (LNG) terminals in North America — one on the Pacific Coast of North Baja California in Mexico and the other in the Gulf of Mexico offshore Louisiana.

Permitting approvals and long-term contracts will all be wrapped up by the end of this year, according to Sempra senior officials.

“We have been building an LNG business for the last three years,” Sempra’s CEO Steve Baum said Thursday during a conference call with financial analysts on its second quarter earnings announcement. “We are ahead of the competition to bring on the next two receiving terminals in North America.”

Baum said that Sempra’s Cameron (LA) LNG project will have “the necessary Federal Energy Regulatory Commission approvals” by the end of this year, and the project will be “fully constructed” by 2006. Two key permits for its Costa Azul site in North Baja California will be forthcoming from Mexican federal and local regulators during the third quarter. Combined, the two LNG sites will give Sempra total regasification capacity of 2.5 Bcf/d, which would make Sempra “the owner of the largest LNG import capacity in North America,” Baum said.

During questioning, Baum said that the delay in getting Mexican approvals from CRE has not had anything to do with Sempra’s proposal or its application, but instead has been tied to two local lawsuits filed in Mexico against the federal regulatory commission. One of those suits has now been dismissed, and Baum said he expected that the other one will be resolved shortly.

Sempra is “actively marketing” the capacity of its two proposed facilities and hopes to announce some long-term contracts later this year, Baum said.

In response to one analyst’s question about where Sempra is in its attempts to line up LNG supplies, Baum said the company is “in a number of discussions,” and he hopes to make some announcements about supply in the third or fourth quarters this year.

“We have a number of discussions under way, ranging from simply marketing capacity to taking the commodity at a discount to index,” Baum said. “We’re in [a] peculiarly favorable position because through our trading energy company we can offer alternatives for marketing to suppliers that may not have that ability to sell, although some of the large oil companies (ChevronTexaco and Shell) of course can do that, but for other producers who lack that capability, we offer that service.”

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