Sempra sees “extremely high” interest in Cameron and Vista Pacifico LNG projects

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Sempra is seeing “a dramatic increase in market interest” for its liquefied natural gas (LNG) export projects under development on Mexico’s Pacific Coast and the U.S. Gulf Coast, according to Justin Bird, CEO of Sempra Infrastructure.

Created in 2021, Sempra Infrastructure is responsible for developing, building and operating Sempra’s natural gas liquefaction, pipeline and storage projects in North America.

LNG projects include Energía Costa Azul (ECA) Phase 1 and Vista Pacifico on Mexico’s Pacific Coast, and Cameron’s Phase 2 expansion in Louisiana.

Sempra executives discussed the status of projects and the global LNG market during Sempra’s fourth quarter earnings call.

Sempra expects ECA Phase 1 to reach first LNG by the end of 2024, while Vista Pacifico and Cameron Phase 2 have not yet made the final investment decision (FID).

For Cameron’s expansion, Sempra is making “great progress” and is targeting FID in “the first part of 2023”, Bird said. The project is expected to add approximately 6.75 million metric tons/year (mmty) of capacity to the terminal’s current 12 mmty. Cameron’s Phase 1 operating terminal, meanwhile, hit record production in Q4 2021, “and we’re working with our customers to accelerate debottlenecking” at the site, Bird said.

Sempra expects the debottlenecking efforts to add an additional 1mmty of production capacity at Cameron, and that this will be completed before the full Phase 2 additional train, Bird said.

For Vista Pacifico, Sempra is “actively marketing” about 10 mmty of pick, “and we’re seeing extremely high levels of interest,” Bird said. “So make no mistake, we are working with our partners and our customers to get them on board as quickly as possible. I wish we could give them more now, but as many of you know, projects take time to develop, authorize and build.

Bird shared the mic with Sempra CEO Jeffrey Martin.

Martin said Mexico, following its 2013-14 constitutional energy reform, has “essentially overbuilt” its pipeline network, “with a view to building much more natural gas generation to replace many of their oil-fired power plants or their old plants.

As a result, “some of this pipeline capacity is unused.”

The electric utility Comisión Federal de Electricidad (CFE) has anchored the construction of the pipeline to ensure an adequate supply of American gas for its growing gas-fired generation fleet.

Sempra and CFE signed a non-binding memorandum of understanding this year to develop Vista Pacifico and a separate LNG regasification plant in La Paz, Baja California Sur, and to restore operations on the Guaymas-El Oro segment of the pipeline system. Sonora de Sempra.

Martin explained that “our partnership with CFE is designed to essentially use a portion of their pipeline system to support the Vista Pacifico project, which reduces the cost they incur for that capability.”

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Martin said Sempra sees growth opportunities in Baja California and Baja California Sur, which “is literally disconnected from a gas and power standpoint from mainland Mexico.”

He said “we believe there will be continued opportunities there and in the future for the construction of pipelines” to improve connectivity.

Sempra “advanced major construction” of ECA Phase 1 during the fourth quarter, management said, adding that the project is on schedule and on budget. Sempra Infrastructure has 15 million LNG projects in operation or under construction.

If sanctioned, Vista Pacifico and Camperon Phase 2 would have a combined projected capacity of over 10 mmty for customers in the Atlantic and Pacific basins.

‘Uncharted Territory

Martin pointed to recent market turmoil and high gas prices as evidence of the global appetite for LNG.

He said “we’re really in uncharted territory, I think, in global energy markets,” citing soaring Brent oil prices and European natural gas futures. First-month Brent oil and Dutch Title Transfer Facility natural gas prices ended above $100/barrel and $32/MMBtu, respectively, on Monday.

He also noted low natural gas storage levels in Europe, which were about 28% below the historical five-year average as of Feb. 26. see this in all of our conversations – this conversation about security of supply and security of the market is becoming more and more important.

“People today… want to make sure they can make contracts where there’s a rule of law, and I think in the medium to long term you’re going to see the United States really flex their muscles. in the LNG space…”

Sempra posted net income of $712 million ($1.90/share) for the fourth quarter, compared with $432 million ($1.43) a year earlier. Annual net income of $1.46 billion ($4.03/share) in 2021, compared to $4.11 billion ($12.93) in 2020.

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