Sempra Energy Unit Signs Commercial Development Agreements With Mitsubishi Corporation, Mitsui & Co., Ltd. to Develop Louisiana Liquefaction Facility

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Apr 17, 2012, 07:00 ET

SAN DIEGO, April 17, 2012 /PRNewswire/ -- A Sempra Energy (NYSE: SRE) unit, Cameron LNG, today announced that the company has signed commercial development agreements with Mitsubishi Corporation (8058.TYO) and Mitsui & Co., Ltd. (8031.TYO) to develop and construct a natural gas liquefaction export facility at the site of Cameron LNG receipt terminal in Hackberry, La.

The commercial development agreements bind the parties to fund all development expenses, including design, permitting and engineering, as well as to negotiate 20-year tolling agreements, based on agreed-upon terms outlined in the commercial development agreements. Each tolling agreement would be for 4 million tonnes per annum (Mtpa). Negotiations with other parties for the export of the remaining 4 Mtpa are ongoing.

The completed liquefaction facility is expected to be comprised of three liquefaction trains with a total export capability of 12 Mtpa of liquefied natural gas (LNG), or approximately 1.7 billion cubic feet (Bcf) per day. Construction on the project is expected to start in late 2013 with operations to commence in late 2016.

"These agreements with Mitsubishi and Mitsui represent a significant step forward in the development of a liquefaction facility at our Louisiana LNG terminal to support international natural gas markets," said Mark A. Snell, president of Sempra Energy.

The liquefaction facility will utilize Cameron LNG's existing facilities, including two marine berths capable of accommodating Q-Flex sized LNG ships, three LNG storage tanks of 480,000 cubic meters, and vaporization capability for regasification services of 1.5 Bcf per day. The anticipated incremental investment in the three-train liquefaction project is estimated to be $6 billion, the majority of which will be project-financed and the balance provided by the project partners in a joint-venture arrangement.

"We look forward to supporting Mitsubishi's and Mitsui's objectives to develop North American gas resources and deliver LNG to worldwide markets through a tolling arrangement at our facility," said Octavio M. Simoes, president of Sempra Energy's LNG operations.

In January 2012, Cameron LNG received approval from the U.S. Department of Energy (DOE) to export up to 12 Mtpa of domestically produced LNG from the Cameron LNG terminal to all current and future Free Trade Agreement countries. The authorization to export LNG to countries with which the U.S. does not have a Free Trade Agreement is pending review by the DOE. Cameron LNG expects to receive the required permits from the Federal Energy Regulatory Commission (FERC) and enter into a turnkey contract in 2013 for engineering and construction services for the project.

Cameron LNG has awarded an engineering services contract to Foster Wheeler AG (NASDAQ: FWLT) for project development, front-end engineering design to support permit applications to the FERC and support for engineering and construction contracting. Additionally, Cameron LNG has engaged the international law firm Morgan Lewis & Bockius LLP as legal counsel for the development of the liquefaction project and The Royal Bank of Scotland (LSE: RBS) as financial advisor for the liquefaction project.

Sempra Energy's subsidiaries operate two LNG receipt terminals in North America -- Energia Costa Azul near Ensenada, Mexico, and Cameron LNG.

Mitsubishi Corporation is a global integrated business enterprise that develops and operates businesses across virtually every industry including industrial finance, energy, metals, machinery, chemicals, foods, and environmental business. With more than 200 offices & subsidiaries in approximately 90 countries worldwide and a network of over 500 group companies, Mitsubishi employs a multinational workforce of nearly 60,000 people.

Mitsui & Co., Ltd. is one of the most diversified and comprehensive trading, investment and service enterprises in the world, with 155 offices in 69 countries, as well as nearly 436 subsidiaries and associated companies. Utilizing the global operating locations, network and information resources, Mitsui is multilaterally pursuing business that ranges from product sales, worldwide logistics and financing, through to the development of major international infrastructure and other projects in the following fields, Iron & Steel Products, Mineral & Metal Resources, Infrastructure Projects, Motor Vehicles, Marine & Aerospace, Chemicals, Energy, Foods & Retail, Consumer Services, Information, Electronics and Telecommunications, Financial Markets and Transportation Logistics.

Sempra Energy, based in San Diego, is a Fortune 500 energy services holding company with 2011 revenues of $10 billion. The Sempra Energy companies' 17,500 employees serve more than 31 million consumers worldwide.

This press release contains statements that are not historical fact and constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by words like "believes," "expects," "anticipates," "intends," "plans," "estimates," "may," "will," "would," "could," "should," "potential," "target," "outlook", "depends," "pursue" or similar expressions, or discussions of our guidance, strategies, plans, goals, initiatives, objectives or intentions. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Future results may differ materially from those expressed in the forward-looking statements. Forward-looking statements are necessarily based upon various assumptions involving judgments with respect to the future and other risks, including, among others: local, regional, national and international economic, competitive, political, legislative and regulatory conditions and developments; actions by the California Public Utilities Commission, California State Legislature, Federal Energy Regulatory Commission, Nuclear Regulatory Commission, California Energy Commission, California Air Resources Board, and other regulatory, governmental and environmental bodies in the United States and other countries where the company does business; capital market conditions, including the availability of credit and the liquidity of our investments; inflation, interest and exchange rates; the impact of benchmark interest rates, generally the U.S. Treasury bond and Moody's A-rated utility bond yields, on our Sempra Utilities' cost of capital; energy markets, including the timing and extent of changes and volatility in commodity prices; the availability of electric power, natural gas and liquefied natural gas, including disruptions caused by failures in the North American transmission grid, pipeline explosions and equipment failures; weather conditions, natural disasters, catastrophic accidents, and conservation efforts; risks inherent in nuclear power generation and radioactive materials storage, including catastrophic release of such materials; wars, terrorist attacks and cyber security threats; business, regulatory, environmental and legal decisions and requirements; expropriation of assets by foreign governments and title and other property disputes; the status of deregulation of retail natural gas and electricity delivery; the timing and success of business development efforts and construction, maintenance and capital projects; the inability or determination not to enter into long-term supply and sales agreements or long-term firm capacity agreements; the resolution of litigation; and other uncertainties, all of which are difficult to predict and many of which are beyond the control of the company. These risks and uncertainties are further discussed in the reports that Sempra Energy has filed with the Securities and Exchange Commission. These reports are available through the EDGAR system free-of-charge on the SEC's website, www.sec.gov, and on the company's website at www.sempra.com.

These forward-looking statements speak only as of the date hereof, and the company undertakes no obligation to update or revise these forecasts or projections or other forward-looking statements, whether as a result of new information, future events or otherwise.

Sempra International, LLC, and Sempra U.S. Gas & Power, LLC, are not the same companies as San Diego Gas & Electric (SDG&E) or Southern California Gas Company (SoCalGas) and Sempra International and Sempra U.S. Gas & Power are not regulated by the California Public Utilities Commission.

Note: Formerly known entities Sempra Generation, Sempra LNG and Sempra Pipelines & Storage have now been realigned under Sempra International and Sempra U.S. Gas & Power.

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