Anonymous - 5-2-2005 at 04:31 PM
http://www.signonsandiego.com/news/business/20050412-9999-1b...
Australian deal worth $10 billion
By Dean Calbreath
April 12, 2005
In a deal worth more than $10 billion, Shell Oil has arranged to ship up to 2.5 million tons of liquefied natural gas each year from Australia to a
terminal that San Diego's Sempra Energy is building in Baja California.
The shipments, scheduled to begin in 2010, would be the first supplies of LNG from Australia to Mexico and the Western United States, representing
about 330 million cubic feet per day.
Under terms of the agreement, which was announced in Australia yesterday by Shell public affairs official Ian McKenzie, the shipments will continue
for 20 to 25 years.
The LNG will be delivered to Sempra's Energia Costa Azul terminal, now under construction 14 miles north of Ensenada. When the terminal opens in
January 2008, it will have enough capacity to handle 1 billion cubic feet of LNG per day.
Although Sempra owns the terminal, it shares capacity equally with Shell. Because the LNG from Australia is coming in under Shell's quota, it will
have no effect on Sempra's revenue.
"Shell can make whatever deals it wants up to that 50 percent level, and it won't have an effect on us," Sempra spokeswoman Jennifer Andrews said.
Sempra has signed an agreement to buy up to 3.7 million tons of LNG ? the equivalent of 500 million cubic feet per day, or 50 percent of the
terminal's capacity ? from Indonesia in early 2008.
Major construction at Costa Azul began March 30. Although some of the gas will be used in Baja, much of it will be shipped north into the United
States.
At the groundbreaking ceremony, Mark Snell, group president of Sempra Global, noted that Sempra's investment in Baja already exceeds $650 million and
that the investments will total more than $1.6 billion when the terminal is completed.
"This level of investment demonstrates our absolute trust in the government and community in Baja California," he said.
Two days later, several Baja California legislators pushed for an investigation into the project, complaining that they have been kept out of the
loop. Sempra officials insist the project complies with all Mexican federal, state and local laws.
Shell's LNG shipments will come from the Gorgon fields of Australia, which contains 40 trillion cubic feet of gas resources. Shell and Chevron/Texaco,
which operate the Gorgon fields under a joint venture, are also negotiating to sell some of the LNG from the fields to China.