November 7, 2018 / 3:28 PM / 10 months ago

Three companies agree to buy LNG from Sempra's Costa Azul in Mexico

(Reuters) - California energy company Sempra Energy said on Wednesday it signed three non-binding agreements to sell all of the liquefied natural gas (LNG) to be produced at its proposed Costa Azul LNG export terminal in Baja California in Mexico.

Sempra Energy headquarters is pictured in downtown San Diego, California, U.S., May 17, 2018. REUTERS/Mike Blake

Sempra said it will now work to negotiate final 20-year LNG sales agreements with units of the three companies - Total SA of France and Mitsui & Co and Tokyo Gas Co Ltd of Japan - and has targeted making a final investment decision to build the first phase of the export terminal in late 2019.

That would potentially allow the project to make its first LNG deliveries in 2023.

Costa Azul is one of dozens of LNG export projects under development in North America that are seeking to supply the world’s growing demand for natural gas.

If built, Costa Azul will have an advantage over most U.S. projects because it will be much closer to Asian markets, like China, where demand for gas is growing fastest as power generators and other industries in the region seek to burn less coal for environmental reasons.

The first phase of Costa Azul is designed to be a single-train liquefaction facility capable of producing about 2.4 million tonnes per year (MTPA) of LNG, equal to about 0.32 billion cubic feet per day (bcfd) of natural gas.

The facility will be located at Sempra’s existing LNG import terminal, which can process about 1 bcfd of gas. The import facility has been operating since 2008.

One billion cubic feet of gas is enough to fuel about 5 million U.S. homes for a day.

Sempra said the three companies seeking to buy the LNG from Costa Azul each will potentially buy about 0.8 million tonnes per annum (MTPA).

In June, Sempra selected TechnipFMC and Kiewit as the engineering, procurement, construction (EPC) contractor for the Costa Azul export project.

In addition to the first and second phases of Costa Azul, Sempra is also developing the Port Arthur LNG export terminal in Texas and two phases of the Cameron LNG export terminal in Louisiana.

The $10 billion first phase of the Cameron project, which includes three liquefaction trains, is under construction and expected to enter service in 2019. Total and Mitsui are joint-venture partners in that first phase.

Reporting by Scott DiSavino; Editing by Andrea Ricci

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