Having failed to shut down the facility, the mayor of Ensenada in Baja California, Mexico, last Wednesday sought to negotiate tax revenues and a new gas transmission pipeline link with Sempra Energy’s Energia Costa Azul liquefied natural gas (LNG) receiving terminal along the Pacific Coast north of the port city. Mexican federal troops came to Sempra’s aid earlier in the skirmish and remained on site last week.

Sempra has drawn increasing governmental and business support in Mexico in the wake of an unsuccessful attempt Feb. 11 by Mayor Enrique Pelayo Torres to seize the terminal. Operations at the facility have continued without interruption.

While eventually admitting that he cannot shut down the plant, Pelayo Torres still talked about the San Diego energy holding company committing “irregularities” in the development of its $875 million, 1 Bcf/d facility. The mayor, who took office Nov. 30, seeks to place various safety related requirements on the plant, such as establishing a buffer zone, disclosing related gas pipeline routes, and having fire and paramedic personnel on the site.

Pelayo Torres refused to meet with Sempra LNG officials, a San Diego-based spokesperson for the company told NGI Wednesday.

“He has not previously requested support for any of the items listed in his media statement,” said the spokesperson, referring to the mayor’s request to negotiate a tax the LNG facility would pay, along with having Sempra build a gas pipeline to serve industrial customers in the city of 260,000.

The most important aspect of the latest developments is that Pelayo Torres now is talking about negotiating, the spokesperson said, without speculating on whether the company would accede to any of his demands.

“The LNG terminal operates with all required permits,” the spokesperson said. “It pays all taxes required by Mexican law and its employees actively participate in charitable giving programs that benefit the citizens of Ensenada.”

For his part, Pelayo Torres said he won’t “politicize the case,” but he stressed that Sempra will have “to sit at a table, we will have to rectify the situation, and we will give them the opportunity to regularize the situation.”

Last Tuesday a small group of Mexican Army troops were on the LNG site, and the federal government said they will remain for “as long as it takes to secure the facility,” a Sempra spokesperson told NGI.

Mexican federal and state officials quickly moved to thwart what they called an illegal power grab by the mayor, who a local newspaper columnist labeled as “old school” and wanting to be “another Hugo Chavez,” referring to the Venezuelan leader who has nationalized energy and other industries in his country.

It has been reiterated by Mexico’s federal Comision Reguladora de Energia (CRE) that Sempra LNG holds all of the local, state and federal permits it needs to operate the Costa Azul terminal. The assault from the mayor comes after Sempra appeared to have won all of its court battles against a disgruntled adjacent property owner who had tried for several years to shut down the LNG facility.

A little after 4 p.m. PST Friday (Feb. 11), what Sempra described as a “well organized effort” unfolded with a large force of city police and SWAT teams moving into the Costa Azul facility with news media accompanying them. The law enforcement personnel entered Sempra’s facilities by force, according to Sempra LNG’s spokesperson.

“Our operations teams maintained their positions at all times and continued to operate the facility as trained without abandoning their posts,” according to the spokesperson, who said local police squads placed closure notices inside the facility. Those notices have since been removed.

“The arbitrary and capricious actions of the mayor were taken…without regard to the safety of the facility, in direct violation of a federal court order, and in spite of receiving a letter from CRE warning the mayor that such actions are outside his jurisdiction.”

Noting that the local officials acted unilaterally in attempting to shut the LNG facility, the Mexico Ministry of the Economy said closure of the plant would have affected gas supplies to local residential and industrial areas in Baja California. “The rapid intervention of the [Mexican] federal government, in coordination with the state government and company, prevented any damage to the company’s operations,” the ministry said.

In December a U.S. District Court in San Diego dismissed a lawsuit by Ramon Eugenio Sanchez Ritchie, leaving the plaintiff’s legal actions in limbo. A similar challenge to Sempra LNG has been dormant in a Mexican court, pending a new hearing date. In the U.S. decision federal District Court Judge Janis Sammartino said Sanchez Ritchie wrongly singled out Sempra for actions taken by the Mexican government.

Sempra contends that the Ensenada mayor’s actions were part of a well orchestrated effort “by a series of individuals” who allegedly are only interested in “extracting millions of dollars from the company.”

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