Sempra Energy and Pacific LNG, a consortium of Repsol YPF, BG Bolivia Corp. and Pan American Energy LLC, have inked a memorandum of understanding to enter into exclusive negotiations for a baseload supply of liquefied natural gas (LNG) from Bolivia to meet growing markets in northwestern Mexico and Southern California.

The 20-year agreement being negotiated would cover the entire 800 MMcf/d output of a two-train LNG plant to be installed by Pacific LNG on the Pacific coast of South America to export gas to North America. The LNG would be delivered to a receiving terminal being developed jointly by Sempra Energy and CMS Energy Corp. north of Ensenada, Baja California, Mexico. The proposed terminal facility, which is expected to begin operation in 2005-2006, would have a send-out capacity of about 1 Bcf/d of gas. From the terminal site, gas would be delivered over a proposed 40-mile pipeline to serve new and existing power plants and industries in both Baja California, Mexico, and Southern California.

The gas would originate from Bolivia’s Margarita Field, which reportedly contains more than 13 Tcf of gas reserves. The partners in the field are Repsol YPF (operator), BG Bolivia and Pan American Energy. After recovery of produced liquids, Pacific LNG would transport dry natural gas from the field location through a dedicated pipeline to a liquefaction plant to be located on the Pacific coast of South America, either in Chile or Peru, and then shipped to the Sempra/CMS terminal in Mexico.

“While clearly much work remains to be done, the Pacific LNG partners are working to develop significant new markets that are required for Bolivian gas,” said consortium spokesman Ernesto Lopez. “Gas from Bolivia is highly competitive with that from other sources in the Pacific, since the shipping distance is shorter,” noted Donald E. Felsinger, group president of Sempra Energy.

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