Bloomberg News

Mitsubishi, Mitsui Back $6 Billion Sempra Gas Terminal

April 17, 2012

Mitsubishi Corp. (8058) and Mitsui & Co. agreed to help Sempra Energy (SRE:US) develop a $6 billion natural-gas export facility in Louisiana, as Japan imported record amounts of the fuel.

Mitsubishi and Mitsui, both based in Tokyo, would each get a third of the 1.7 billion cubic feet a day of export capacity in exchange for helping develop the project, San Diego-based Sempra said today in a statement. The gas-liquefaction plant will be part of Sempra’s existing import terminal in Hackberry, Louisiana.

A surge in North American production has caused gas futures in New York to drop to a 10-year low and owners of liquefied natural gas import terminals to propose exports. Asian demand has climbed as Japan’s 10 regional electric utilities bought record amounts of LNG last year to generate power, replacing nuclear output after last year’s Fukushima disaster shut all but one of the nation’s 54 reactors.

Sempra will retain 50 percent ownership of the project, Doug Kline, a spokesman for the company, said today in an e- mail. How much the Mitsui and Mitsubishi (8306) invest depends on financing arrangements yet to be determined, he said.

FERC Approval

Today’s announcement follows the Federal Energy Regulatory Commission’s decision yesterday to approve Cheniere Energy Inc. (LNG:US)’s application to export gas from its facility in Cameron Parish, Louisiana.

To export gas by tanker, the fuel is cooled to minus 260 degrees Fahrenheit (minus 162 Celsius) causing it to condense and become a liquid.

Sempra’s facility may begin exporting gas in late 2016, pending regulatory approval and debt financing. The company is awaiting Federal Energy Regulatory Commission approval and permission from the Energy Department to export the fuel to nations that don’t have free-trade agreements with the U.S.

Sempra rose 0.9 percent to $63.73 at 11:39 a.m. in New York. Mitsui gained 0.3 percent to 1,275 yen and Mitsubishi fell 0.2 percent to 1,770 yen at the close in Tokyo.

To contact the reporter on this story: Jim Polson in New York at jpolson@bloomberg.net

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net


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Companies Mentioned

  • SRE
    (Sempra Energy)
    • $106.0 USD
    • 0.67
    • 0.63%
  • LNG
    (Cheniere Energy Inc)
    • $84.16 USD
    • -0.30
    • -0.36%
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