Sempra Energy achieves three major LNG milestones May 05 2005 http://www.sempra.com/ Groundbreaking March 30, 2005   MOU with Gazprom April 25, 2005 Sempra Eni S.p.A. Lake Charles, LA March 8, 2005                        Our companies San Diego Gas & Electric Southern California Gas Co. Sempra Commodities Sempra Financial Sempra Generation Sempra LNG Sempra Pipelines & Storage Sempra Energy continued to build upon its status as one of North America's leaders in importing new liquefied natural gas (LNG) supplies when it achieved three more major milestones this spring in the development of its North American LNG business. MOU with Gazprom April 25, 2005 Sempra Energy announced that Sempra Global has signed a preliminary, nonbinding Memorandum of Understanding (MOU) with Gazprom, the largest natural gas-producing company in the world, to cooperate in the delivery and associated marketing of LNG in North America. On March 31, groundbreaking for the construction phase took place at Sempra LNG's Energía Costa Azul LNG receipt terminal in Baja California, Mexico. This is the first LNG receipt terminal being built on the West Coast of North America. Sempra Eni S.p.A. Lake Charles, LA March 8, 2005 Sempra LNG signed a preliminary, nonbinding Heads of Agreement (HOA) that could provide Eni S.p.A., one of the world's leading oil and natural gas exploration and production companies, with about one-third of the capacity of Sempra LNG's Cameron LNG receipt terminal being developed near Lake Charles, La. Memorandum of Understanding The preliminary, nonbinding Memorandum of Understanding (MOU) Sempra Global signed with Gazprom on April 25 contemplates importing Russian LNG into Sempra LNG's receipt terminals under development in North America and marketing of the natural gas through an arrangement with Sempra Commodities. "We are pleased to sign this agreement to help facilitate the movement of Russia's plentiful natural gas into the North American marketplace, where it is needed," said Don Felsinger, president and chief operating officer of Sempra Energy. "This represents a strategic alliance between Gazprom, the world's largest gas company, and Sempra Energy, one of the largest natural gas marketers in North America. "This agreement is an important step in providing Russian gas supply to the U.S. market," said Alexey Miller, chairman of Gazprom. "Sempra Global is well-positioned as a gas trading and transportation company in the United States and, because they do not intend to enter the production business outside the United States, they make an ideal partner for us." Gazprom plans to begin exports of the natural gas to the United States this year. The company also will begin drilling in the Shtokman gas field in the Barents Sea, one of the world's biggest offshore gas fields with almost 3 trillion cubic meters of proven reserves, and begin exports from it in 2010-11. Miller said that offshore technological challenges were not a concern because of the company's related experience with the Norway North Sea field. Gazprom, based in Moscow, Russia, is the world's largest natural gas producer with 540 billion cubic meters of sales in 2004. Gazprom has provided a reliable gas supply to the European market for almost 30 years. SAN DIEGO and MOSCOW, April 25, 2005 Sempra Energy (NYSE: SRE) today announced that Sempra Global, the umbrella for the company’s businesses operating in competitive energy markets, has signed a Memorandum of Understanding (MOU) with Gazprom, the largest natural gas producing company in the world, to cooperate in the delivery and associated marketing of liquefied natural gas (LNG) in North America. Donald E. Felsinger, president and chief operating officer of Sempra Energy, and Alexey Miller, chairman of Gazprom, signed the MOU in Moscow today.  The non-binding agreement contemplates importing Russian LNG into Sempra LNG’s receipt terminals under development in North America and marketing of the natural gas through an arrangement with Sempra Commodities.     “We are pleased to sign this agreement to help facilitate the movement of Russia’s plentiful natural gas into the North American marketplace, where it is needed,” said Felsinger.  “This represents a strategic alliance between Gazprom, the world’s largest gas company, and Sempra Energy, one of the largest natural gas marketers in North America.” “This agreement is an important step in providing Russian gas supply to the U.S. market,” said Miller.  “Sempra Global is well-positioned as a gas trading and transportation company in the United States and, because they do not intend to enter the production business outside the United States, they make an ideal partner for us.”   Sempra LNG, a unit of Sempra Global, currently is developing three LNG receipt terminals in North America.  Its Energía Costa Azul terminal in Baja California, Mexico, is under construction and on schedule to be operational by 2008.  The Cameron LNG terminal near Lake Charles, La., is fully permitted and could begin operations in 2008.  The third LNG receipt terminal, Port Arthur LNG, near Port Arthur, Texas, is in the permitting process at the Federal Energy Regulatory Commission and could be operational in 2009. Gazprom plans to begin exports of natural gas to the United States this year.  The company also will begin drilling in Shtokman gas field in the Barents Sea, one of the world’s biggest offshore gas fields with almost 3 trillion cubic meters of reserves, and begin exports from it in 2010-11.  Miller said that offshore technological challenges were not a concern because of the company’s related experience with the Norway North Sea field. Gazprom, based in Moscow, Russia, is the world’s largest natural gas producer with 540 billion cubic meters of sales in 2004.  Gazprom has provided a reliable gas supply to the European market for almost 30 years.   Sempra Commodities, also a unit of Sempra Global, is a leading participant in marketing and trading of physical and financial commodity products, including natural gas, power, petroleum products and base metals.  Sempra Commodities is one of the largest marketers of natural gas in North America. Sempra LNG oversees LNG project development Sempra Energy, based in San Diego, is a Fortune 500 energy-services holding company with 2004 revenues of $9.4 billion.  The Sempra Energy companies’ more than 13,000 employees serve more than 10 million customers in the United States, Europe, Canada, Mexico, South America and Asia.  Energía Costa Azul Local and state government officials, community leaders, project partners, employees and other friends of Sempra LNG's Energía Costa Azul LNG receipt terminal were on hand on March 31 for the groundbreaking of the site's construction phase. "This is an historic event in many ways," said Darcel Hulse, president of Sempra LNG. "When it's complete, Energía Costa Azul will touch many lives, creating a better economy, a better quality of life and a better community for today's generation and for all the generations to come in Baja California." Helps the economy Mark Snell, group president of Sempra Global, described the many benefits the terminal will have for the area, including new jobs, increased tax revenue and promotion of economic development. "Sempra Energy Mexico has its base of operations in Tijuana, with nearly 400 employees and an investment in the country that already exceeds $650 million," Snell said. "When this LNG project is completed, that investment will rise to more than $1.6 billion. This level of investment demonstrates our absolute trust in the government and community in Baja California." Meets natural gas need Building Energía Costa Azul will help meet Mexico's huge need for natural gas, Snell said. "The demand for natural gas in Mexico is expected to nearly double by 2010," he said. "Gas-fired power generation is the primary driver of this demand. While demand for natural gas is growing, gas production is declining. That's creating a gap between supply and demand, and many experts agree that imported LNG is the natural choice to fill that gap." Plans call for Energía Costa Azul to go into operation in early 2008. Energía Costa Azul groundbreaking March 30, 2005 The construction phase for Sempra Energy's Energía Costa Azul-the first liquefied natural gas (LNG) receipt terminal being built on the West Coast of North America-began on March 30, 2005, with a groundbreaking ceremony. Local and state government officials, community leaders, project partners, employees and other friends of the terminal were at the event. "This is an historic event in many ways," said Darcel Hulse, president of Sempra LNG. "When     groundbreaking at Energia Costa Azul Darcel Hulse (left), Mark Snell (right) and a representative from the Mayor of Ensenada's office begin the Energía Costa Azul groundbreaking ceremonies. it's complete, Energía Costa Azul will touch many lives, creating a better economy, a better quality of life and a better community for today's generation and for all the generations to come in Baja California." Helps the economy Mark Snell, group president of Sempra Global, described the many benefits the terminal will have for the area, including new jobs, increased tax revenue and promotion of economic development. "Sempra Energy Mexico has its base of operations in Tijuana, with nearly 400 employees and an investment in the country that already exceeds $650 million," Snell said. "When this LNG project is completed, that investment will rise to more than $1.6 billion. This level of investment demonstrates our absolute trust in the government and community in Baja California." Meets natural gas need Building Energía Costa Azul will help meet Mexico's huge need for natural gas, Snell said. "The demand for natural gas in Mexico is expected to nearly double by 2010," he said. "Gas-fired power generation is the primary driver of this demand. While demand for natural gas is growing, gas production is declining. That's creating a gap between supply and demand, and many experts agree that imported LNG is the natural choice to fill that gap." Head of the line Hulse stated again that building Energía Costa Azul will also help build self-sufficiency for Baja California. "Because Baja California's gas infrastructure is isolated from the rest of Mexico's energy supply, it has relied on U.S. gas supplies that are delivered by the United States," he said. "With the Energía Costa Azul LNG receipt terminal, Baja California will move to the head of the line for access to new, imported gas supplies. This will empower the region with a competitive source of supply." Plans call for Energía Costa Azul to go into operation by January 2008. Preliminary agreement On March 8, Sempra LNG signed a preliminary, nonbinding Heads of Agreement (HOA) to provide Eni S.p.A. with about one-third of the capacity of Sempra LNG's Cameron LNG receipt terminal being developed near Lake Charles, La. This HOA is in keeping with Sempra Energy's prudent risk-management approach that involves obtaining commitments for a major portion of a project's supply or capacity before moving forward with the project. "It's been our strategy not to commence construction, or commit significant capital dollars, until we have contracted the facility, until it is hedged," says Steve Baum, Sempra Energy's chairman and chief executive officer. Agreement details Under the proposed agreement, Sempra LNG will provide Eni between 400 million cubic feet per day (MMcfd), or 4.1 billion cubic meters (Bcm) per year, and 600 MMcfd, or 6.2 Bcm per year, of capacity in the company's Cameron LNG receipt terminal. When it's finished in 2008, Cameron LNG will have an initial sendout capacity of 1.5 billion cubic feet per day, or 15.5 Bcm per year, of natural gas. "This new relationship with one of the world's leading oil and natural gas companies marks another significant step in our corporate LNG strategy," says Darcel Hulse, president of Sempra LNG. "We look forward to concluding the definitive terminal service and supply agreements involving Cameron LNG in the near future so that we can begin delivering new gas supplies through the facility in 2008." The HOA contemplates finalizing a definitive 20-year terminal services agreement by mid-2005. SAN DIEGO and MILAN, March 8, 2005 – Sempra LNG, a unit of Sempra Energy (NYSE: SRE), today announced it has signed a Heads of Agreement (HOA) that provides Eni S.p.A.  (NYSE: E), one of the world’s leading oil and natural gas exploration and production companies, with approximately one-third of the capacity of Sempra LNG’s Cameron LNG receipt terminal under development near Lake Charles, La.  The non-binding HOA contemplates finalizing a definitive 20-year terminal services agreement by mid-2005. Under the proposed agreement, Sempra LNG will provide Eni between 400 million cubic feet per day (MMcfd), or 4.1 billion cubic meters (Bcm) per year, and 600 MMcfd, or 6.2 Bcm per year, of capacity in the company’s Cameron LNG receipt terminal.  Upon its completion in 2008, Cameron LNG will have an initial sendout capacity of 1.5 billion cubic feet per day, or 15.5 Bcm per year, of natural gas.   “This new relationship with one of the world’s leading oil and natural gas companies marks another significant step in our corporate LNG strategy,” said Darcel L. Hulse, president of Sempra LNG.  “We look forward to concluding the definitive terminal service and supply agreements involving Cameron LNG in the near future, so that we can begin delivering new gas supplies through the facility in 2008.” On Jan. 27, 2005, Sempra LNG announced it signed an HOA providing Tractebel LNG North America LLC (Tractebel LNG NA), one of the business divisions of SUEZ (NYSE: SZE), with between 325 MMcfd and 500 MMcfd of capacity of the Cameron LNG receipt terminal.  That non-binding HOA contemplates finalizing a definitive 20-year capacity agreement by June 30, 2005. Cameron LNG is located near the Gulf Coast along the Calcasieu Ship Channel, about 15 miles south of Lake Charles.  The project has received the “authority to construct” from the Federal Energy Regulatory Commission and is slated to begin construction later this year.  Cameron LNG is expected to be interconnected with U.S. interstate and intrastate pipelines.  These pipelines will have up to 10 billion cubic feet per day of downstream capacity to the Midwest, Southeast, Atlantic and Northeast markets. Another Sempra LNG project, Energía Costa Azul, is designed to help Baja California, Mexico, meet its long-term energy needs, while, at the same time, providing significant supplies to the U.S. market.  It will be the first major LNG receipt terminal built on North America’s West Coast.  Sempra LNG is the sole owner and operator of Energía Costa Azul.  The company has signed a 20-year agreement with Shell International Gas Limited for half of the facility’s capacity, or 500 MMcfd.  The remaining capacity will be utilized to send out 500 MMcfd of regasified LNG, which Sempra LNG has procured from Indonesia’s Tangguh LNG project.  Construction at Energía Costa Azul has commenced and is scheduled to begin operation in early 2008. LNG is natural gas that has been cooled below minus 260 degrees Fahrenheit and condensed into a liquid.  LNG occupies 600 times less volume than in its gaseous state, which allows it to be shipped in cryogenic tankers from remote locations to markets where it is needed.  At the receiving terminal, LNG is unloaded and stored until it is vaporized back into natural gas and moved via pipelines to customers. Headquartered in Italy, Eni S.p.A. is an international company operating in the oil, natural gas, electricity generation, petrochemicals, engineering and construction and oilfield services sectors of the energy industry.  The company is active in approximately 70 countries and has more than 76,000 employees.  The company’s 2004 consolidated net sales from operations of 58,346 million euros generated a net profit of 7,274 million euros. Sempra LNG, a unit of Sempra Global, oversees LNG project development.  Sempra Energy, based in San Diego, is a Fortune 500 energy-services holding company with 2004 revenues of $9.4 billion.  The Sempra Energy companies’ 13,000 employees serve more than 10 million customers in the United States, Europe, Canada, Mexico, South America and Asia.