Press

Mexican West Coast Manzanillo LNG Terminal Advancing Rapidly, Javier H. Estrada to Address San Diego Conference
Friday, October 27, 8:00 AM CT

Houston, TX -- Manzanillo promises to be the third terminal to open Mexican access to world LNG markets and the second on the country's Pacific coast. Javier H. Estrada, a former commissioner for Mexico's Energy Regulatory Commission (CRE) will discuss its advancement, Nov. 10, during a San Diego conference.

Mexico's expansion into LNG has been rapid. It became an official LNG importer earlier this year when a Nigerian cargo arrived Aug. 17 at the Alta Mira terminal on the Gulf Coast.

Beginning in 2008, Mexico will link for the first time the Atlantic and Pacific LNG markets when Sempra Energy opens its Energia Costa Azul (ECA) terminal north of the Ensenada, Baja.

"Even though the effect on cross North American gas trade will be inconsequential, the opening of the ECA terminal will be a big day for global LNG," notes Bob Nimocks, president of Zeus Development Corporation, a firm that analyzes world gas development and sponsor of the San Diego conference. "ECA represents the golden spike in natural gas trade that circumferences the globe."

The Manzanillo terminal will accelerate this linkage by supplying power plants in the states of Colima, Queretaro and Jalisco near Guadalajara, Mexico's second largest city. Early this year, Mexico's state-owned electricity company, CFE, and state oil company, Pemex, launched a tender for the construction of the $430 million project.

Both the Manzanillo and ECA terminals will be reviewed extensively during the Nov. 8-10 conference, entitled "LNG: When East Meets West," at the Dana on Mission Bay hotel in San Diego. Nov. 8, delegates will tour the ECA terminal construction.

Other topics to be addressed during the conference include the impact of West Coast terminals on Asian LNG trade; LNG's affect on West Coast markets, as well as reviews of the status of several proposed West Coast terminals from Prince Rupert to Manzanillo.

Representatives from the following organizations have registered to attend: BHP Billiton; Burckhardt Compression; CEC; Chevron; Chiyoda; Transwestern Pipeline; Deutsche Bank; DKRW; Jordan Cove Energy; Kitimat LNG; Moffatt & Nichol; Mustang; NorthernStar; Reliance Energy; Repsol; Selas Fluid; Sempra; St. Mary Land & Exploration; Tokyo Gas; Transcanada; Tri-Star Petroleum; Van Ness Feldman; Venable;
WestPac; and Woodside.

LNG Industry Working to Enable West Coast Access and Cross-Oceanic Arbitrage; Conference Examines Implications, Tour Costa Azul Terminal
Friday September 29, 8:00 AM CT

HOUSTON, TX -- Sep 29, 2006 -- Cross-oceanic arbitrage has been highly profitable for such firms as BG Group, Suez, and BP. They have worked during the past two decades to develop LNG supplies that can access both European and North American markets.

Last winter, their traders made as much as $15 million per cargo when European prices surged well above those in the United States. Firms with access to both markets bought pipeline gas to serve one customer while sending extra cargoes to serve the other. This year, the reverse might happen if North America's winter proves colder. Both BG and Suez stock prices climbed more than 50% between November and April, nearly $40 billion in equity value, as profits mounted.

"Companies that have established both U.S. and European access have become legends of international gas trade," said Bob Nimocks, president of Zeus Development Corp, a research firm that follows LNG. "Competitors would expand trade if they could, but NIMBYism, construction delays, and difficult regulatory environments serve as entry barriers."

With the opening of new terminals along North America's West Coast, similar opportunities may arise in the Pacific. In 2008, Sempra's Costa Azul terminal is slated to become the first of several terminals to supply Pacific LNG to the western Americas, from Santiago, Chile, to Prince Rupert, Canada.

While the terminals will supply critical natural gas to energy-constrained markets, they also will create linkage to Asian markets. Ultimately, the markets will equilibrate, but during the build-up phase, early movers expect to make considerable returns.

"Anytime you can connect a thin straw between two large, independent markets, the profit potential is considerable," Nimocks notes. "After last year's hurricanes, U.S. prices were two and a half times Asian prices. Had West Coast terminals been in place, arbitrageurs would have made fortunes."

To discuss how cross-Pacific trade may unfold, a conference, entitled "LNG: When East Meets West," will be held Nov. 8-9 in San Diego. It features a tour of Sempra's Costa Azul LNG terminal for the first 100 registrants as well as speakers from such organizations as Black & Veatch, California Energy Commission, McKinsey & Company, NorthernStar, Sempra Energy, Transwestern, and Woodside.

More details can be obtained online at www.LNGExpress.com/EMW or by contacting Rebecca Maitland (713-333-5773, rmaitland@zeusdevelopment.com).