Permits for Sempra's LNG plan suspended
http://www.signonsandiego.com/news/business/20031219-9999_1b...
By Diane Lindquist
December 19, 2003
A Mexican federal court has temporarily suspended two of Sempra Energy's key permits to develop a liquefied natural gas project along the Baja
California coast.
Mexico's Fiscal Justice and Administrative Court last month put Sempra's project on hold until the court fully studies the risks the project poses to
tourism development and the environment. It also plans to assess whether proper procedures were followed in issuing the permits.
The decision, obtained this week by The San Diego Union-Tribune, suspends the permit by Mexico's Energy Regulatory Commission to develop and operate
the facility as well as the environmental permit by Mexico's Environmental Ministry.
Along with local land use permits, the two permits are the most important to completing the development.
The court's temporary stay could jeopardize Sempra's project and place the company behind competitors in the race to build Baja California LNG
facilities just as Sempra yesterday announced an agreement to obtain liquefied natural gas supplies from Indonesia.
Darcel Hulse, president of Sempra Energy LNG Corp., said the suspension does not mean the permits have been revoked or that the project will not be
completed by 2007, when Sempra hopes to begin selling regasified LNG to customers in Baja California and California.
"It won't affect our timetable because this matter will be resolved," Hulse said.
He said there have been numerous requests for amparos, comparable to court injunctions in the United States, and Sempra has prevailed in all. He said
he couldn't recall the number or exact details of each case.
At least a dozen suits have been filed in Mexican courts challenging permits that have been granted to Sempra and Shell Oil Co., which plans to build
an LNG terminal near Sempra's on the undeveloped Costa Azul plateau.
"We are not concerned with people exercising their legal rights," Hulse said. "But we have a totally solid project. And we have great trust in those
legal systems."
Roberto Vald?s, a developer of the Bajamar community and golf resort who filed the lawsuit, said the court's ruling was the first action taken on the
numerous suits that have been filed.
In the suit, he alleged that Sempra's LNG project, less than a mile from Bajamar, will financially harm the resort and its planned expansion of homes
and recreational facilities. The suit also contends the environmental ministry did not follow proper procedures in determining the project would
result in little risks to flora and fauna, particularly marine life.
"We're encouraged," Vald?s said.
He hopes the court ruling will persuade Baja California and Ensenada officials to reconsider provisional land use permits granted to Sempra.
"But we know in Mexico the executive branch has strong powers," Vald?s said.
Manuel Garcia P******, the attorney in the case, said the judge granted the temporary suspension because if Sempra were allowed to proceed with the
LNG project, the harm done to Bajamar and its planned expansion could not be remedied.
"The damage that will result will not be possible to repair afterward," he said.
Sempra's Hulse said the company plans within a few months to solidify its "heads of agreement" deal with British Petroleum and Indonesia's gas and oil
ministry for liquefied natural gas supplies from that country's Tangguh gas fields.
The agreement was signed yesterday in Washington with U.S. Energy Secretary Spencer Abraham, Indonesia Minister of Energy and Mineral Resources
Purnomo Yusgiantoro and Mexican Energy Minister Felipe Calderon attending.
The deal, which is to provide 500 million cubic feet of gas a day from Indonesia's Tangguh LNG liquefaction facility, is expected to fill half the
capacity of Sempra's Costa Azul project.
"It means we have a viable supply of LNG from a country that has been a producer of LNG for 30 years," Hulse said.
He said the company expects to issue an announcement concerning additional supplies "in the near future."
LNG suppliers extract the gas from foreign fields, cool and compress it for shipment aboard specialized oceangoing tankers, then regasify the
commodity upon delivery to receiving terminals, where it is sent by pipeline to end users, mainly gas-fired electric power plants.
Sempra's competitors vying to build LNG receiving terminals in Baja California already have announced supply agreements.
ChevronTexaco and Shell are part owners of a venture to tap the Gorgon gas reserves off western Australia. Environmental approval is expected by the
end of next year, the projects will start in 2005, and gas will be shipped by 2008, Western Australia Premier Geoff Gallop said during a recent visit
to San Diego.
Marathon Oil has signed a memorandum of understanding with Pertamina and P.T. Exspan Tomori Sulawesi for liquefied natural gas supplies from Sulawesi
Island, Indonesia.
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