Sempra Advances Energy Security with TotalEnergies
The war in Ukraine has led to human suffering at a scale not seen in Europe since World War II, while also emphasizing the critical role of energy security in overall economic and social wellbeing. Among other takeaways from the conflict, there is a call for greater alignment and cooperation in support of Europe’s need for reliable access to diverse sources of cleaner energy.
With last week’s energy accord between the U.S. and the European Commission, alliances between some of the leading energy companies like TotalEnergies and Sempra are increasingly important to transatlantic trade, energy security and environmental progress. With Sempra’s broad portfolio of liquefied natural gas (LNG) export projects in operations and development in North America, we are uniquely positioned to advance secure access to U.S. LNG for our allies abroad.
Leveraging U.S. Natural Gas
Working in concert with strong counterparties, Sempra is playing a critical role in building the 21st century energy networks that promote energy diversification, security, resiliency and affordable access to cleaner forms of energy for consumers around the world.
The U.S. Energy Information Administration projects U.S. LNG exports will reach 11.4 billion cubic feet per day in 2022, accounting for an estimated 22% of expected world LNG demand. At CERAWeek in Houston, LNG — the fossil fuel with the lowest carbon intensity — took center stage.
“Earlier this month, one of the key takeaways at CERAWeek was the immediacy of the need to support Europe and Asia with higher volumes of LNG,” said Justin Bird, chief executive officer of Sempra Infrastructure. “The spotlight is shining on the issue of security of energy supplies — and we believe the U.S. is well positioned to help solve that challenge.”
Sempra and TotalEnergies Expand Strategic Alliance
This week, Sempra and TotalEnergies announced that Sempra Infrastructure, a subsidiary of Sempra, and TotalEnergies are expanding their North American strategic alliance through a non-binding memorandum of understanding (MOU) for the proposed Vista Pacífico LNG export facility in Topolobompo, Mexico. The MOU contemplates TotalEnergies contracting for approximately one-third of the long-term export production of the LNG facility under development on Mexico’s West Coast, as well as TotalEnergies’ potential participation as a minority equity investor in the project. The MOU also contemplates cooperation on several renewable energy projects in North America.
Sempra Infrastructure and TotalEnergies are already partners in two joint venture projects: Cameron LNG, a 12-Mtpa LNG export facility operating in Hackberry, Louisiana; and Energía Costa Azul (ECA) LNG Phase 1, an approximately 3-Mtpa liquefaction facility under construction in Baja California, Mexico.
“Over the past several years, TotalEnergies has become a leading exporter of U.S. LNG and has developed an impressive pipeline of renewable projects in the U.S.,” said Bird. “Expanding our strategic alliance at Cameron LNG and ECA LNG Phase 1 to a third LNG project on the West Coast highlights Sempra Infrastructure’s differentiated strategy of offering customers the optionality of directly dispatching LNG into both the Atlantic and Pacific regions.”
The Vista Pacífico LNG project is expected to be a mid-scale facility that would source lower-cost natural gas from the Permian Basin for export to high-demand markets, including Asia, Europe and South America, and to satisfy natural gas demand requirements in other regions of Mexico.
In 2020, TotalEnergies acquired a 16.6% equity stake in ECA LNG Phase 1, which is under construction, and signed a 20-year sale and purchase agreement for approximately 1.7 million tonnes per annum (Mtpa) of LNG from the export facility. Cameron LNG, developed by Sempra, is jointly owned by affiliates of Sempra Infrastructure, TotalEnergies, Mitsui & Co. Ltd., and Japan LNG Investment, LLC, a company jointly owned by Mitsubishi Corporation and Nipon Yusen Kabushiki Kaisha.
Working Together to Advance a Better Future for All
Great global challenges can only be overcome when public and private industries from across the world coalesce around a collective goal. We must all do our part to improve energy security and advance climate goals through strategic investments in renewable energy and natural gas. Collaboration like we are announcing this week with TotalEnergies will be critical to support the future transformation of the world’s energy ecosystem. At Sempra, we think the U.S. has an important role to play in improving the energy security of Europe and the overall sustainability of advanced and emerging economies.
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Factors, among others, that could cause actual results and events to differ materially from those described in any forward-looking statements include risks and uncertainties relating to: California wildfires, including the risks that we may be found liable for damages regardless of fault and that we may not be able to recover all or a substantial portion of costs from insurance, the wildfire fund established by California Assembly Bill 1054, in rates from customers or a combination thereof; decisions, investigations, regulations, issuances or revocations of permits and other authorizations, renewals of franchises, and other actions by (i) the California Public Utilities Commission (CPUC), Comisión Reguladora de Energía, U.S. Department of Energy, U.S. Federal Energy Regulatory Commission, Public Utility Commission of Texas, and other regulatory and governmental bodies and (ii) states, counties, cities and other jurisdictions in the U.S., Mexico and other countries in which we do business; 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failure of foreign governments and state-owned entities to honor their contracts and commitments; actions by credit rating agencies to downgrade our credit ratings or to place those ratings on negative outlook and our ability to borrow on favorable terms and meet our debt service obligations; the impact of energy and climate policies, legislation and rulemaking, as well as related goals set, and actions taken, by companies in our industry, including actions to reduce or eliminate reliance on natural gas generally and any deterioration of or increased uncertainty in the political or regulatory environment for California natural gas distribution companies and the risk of nonrecovery for stranded assets; the pace of the development and adoption of new technologies in the energy sector, including those designed to support governmental and private party energy and climate goals, and our ability to timely and economically incorporate them into our business; weather, natural disasters, pandemics, accidents, equipment failures, explosions, acts of terrorism, information system outages or other events that disrupt our operations, damage our facilities and systems, cause the release of harmful materials, cause fires or subject us to liability for property damage or personal injuries, fines and penalties, some of which may not be covered by insurance, may be disputed by insurers or may otherwise not be recoverable through regulatory mechanisms or may impact our ability to obtain satisfactory levels of affordable insurance; the availability of electric power and natural gas and natural gas storage capacity, including disruptions caused by failures in the transmission grid or limitations on the withdrawal of natural gas from storage facilities; the impact of the COVID-19 pandemic, including potential vaccination mandates, on capital projects, regulatory approvals and the execution of our operations; cybersecurity threats to the energy grid, storage and pipeline infrastructure, information and systems used to operate our businesses, and confidentiality of our proprietary information and personal information of our customers and employees, including ransomware attacks on our systems and the systems of third-party vendors and other parties with which we conduct business, all of which may become more pronounced in the event of geopolitical events and other uncertainties, such as the conflict in Ukraine; the impact at San Diego Gas & Electric Company (SDG&E) on competitive customer rates and reliability due to the growth in distributed and local power generation, including from departing retail load resulting from customers transferring to Community Choice Aggregation Direct Access, and the risk of nonrecovery for stranded assets and contractual obligations; Oncor Electric Delivery Company LLC’s (Oncor) ability to eliminate or reduce its quarterly dividends due to regulatory and governance requirements and commitments, including by actions of Oncor’s independent directors or a minority member director; volatility in foreign currency exchange, inflation and interest rates and commodity prices, including inflationary pressures in the U.S., and our ability to effectively hedge these risks and with respect to inflation and interest rates, the impact on SDG&E’s and SoCalGas’ cost of capital and the affordability of customer rates; changes in tax and trade policies, laws and regulations, including tariffs and revisions to international trade agreements that may increase our costs, reduce our competitiveness, or impair our ability to resolve trade disputes; and other uncertainties, some of which may be difficult to predict and are beyond our control.
These risks and uncertainties are further discussed in the reports that Sempra has filed with the U.S. Securities and Exchange Commission (SEC). These reports are available through the EDGAR system free-of-charge on the SEC's website, sec.gov, and on Sempra’s website, sempra.com. Investors should not rely unduly on any forward-looking statements.
Sempra Infrastructure, Sempra LNG, Sempra Texas Utilities, Oncor and Infraestructura Energética Nova, S.A.P.I. de C.V. (IEnova) are not the same companies as the California utilities, SDG&E or SoCalGas, and Sempra Infrastructure, Sempra LNG, Sempra Texas Utilities, Oncor and IEnova are not regulated by the CPUC.
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