Sempra Proposes Indonesian LNG Imports

Among the half-dozen proposals for Liqified Natural Gas (LNG) Ports along the West Coast, Sempra's Baja terminal is on the fastest track. Being in Mexico, the Port is not subject to most of the regulatory entanglement such projects would find themselves in in California.

Sempra is forging ahead and has secured a source for the LNG coming into the port--in Indonesia.

Sempra Energy (SRE) expects to ink a deal with BP PLC (BP) by the end of August to buy some 500 million cubic feet a day of liquefied natural gas for the import facility it's building in Baja California.

The two companies signed a nonbinding agreement for a 20-year supply with index-based pricing in December. The gas will come from the planned Tangguh LNG liquefaction facility in Indonesia, which is being built by a consortium led by BP.

"BP and the Indonesian government have said they want a deal by the end of August, and I see no reason why that shouldn't happen," Sempra President Don Felsinger said Tuesday in an interview.

Cargoes are expected to start arriving at the Costa Azul terminal in Mexico in 2007, when the facility is to become operational. The facility will be able to process 1 billion cubic feet a day.

Of course, Indonesia is a member of OPEC--which means half of the supply coming into the Sempra facility would be subject to that group's oligopolistic practices--and Indonesia is also a hotbed for Muslim terrorists.

Security plans for the Boston convention (Registration Required) have forbidden inbound shipments of LNG tankers because of the security risks and, perhaps, in part because of Dick Clarke's disputed assertion that many of the 9-11 terrorists came into the United States on an LNG tanker from Algeria.