Sempra to sell out of South America

US energy company Sempra Energy is looking to sell its South American utilities to focus on core areas, CEO Stephen Baum said in the company's third quarter earnings conference call. "We don't think they're core to our strategy," he said, adding: "Over some period of time, maybe 4-5 years, we would expect to divest those businesses, given the appropriate conditions." Through Sempra Energy International, the company holds stakes in Argentine gas distributors Camuzzi Gas Pampeana and Camuzzi Gas del Sur, Chilean power distributor Chilquinta Energia, gas distributor Energas, energy services company Tecnored and Peruvian power distributor Luz del Sur. Counting the performance of these utilities as a whole and not just Sempra's stake, natural gas sales in Argentina were 184 billion cubic feet (bcf) in the first nine months of the year, up 5.75% from the same period 2002, and customer numbers increased 4% to 1.4 million at September 30, 2003. In Chile, nine-month gas sales were flat at 2bcf, although customer numbers increased 2.86% to 36,000. Nine-month power sales increased 1.96% to 3.02GWh in Peru, while in Chile sales increased 4.66% to 1.37GWh. Customer numbers increased 1.96% to 729,000 in Peru, and 2.07% in Chile to 493,000. Sempra also operates in Mexico, and in the first nine months of the year its 100%-owned gas distribution subsidiaries Ecogas Mexicali, Ecogas Chihuahua and Ecogas La Laguna-Durango increased their client numbers by 11.1% to 90,000, although sales fell 18.9% to 30bcf. Also in Mexico, Sempra owns natural gas pipelines Gasoducto Bajanorte and Transportadora de Gas Natural (TGN), as well as the Costa Azul liquefied natural gas (LNG) project. Costa Azul is the only fully licensed project for an LNG receiving terminal on Mexico's west coast, Baum said, adding that Sempra is now looking for capacity agreements before starting construction. "Sempra will not commence construction of these sites [Costa Azul in Mexico, and Cameron in Louisiana, US] until we have a sufficient portion of capacity hedged or contracted forward," Baum said. "We are in discussions with multiple parties for each of our projects and hope to make announcements soon," he added. Sempra has been in talks with the Pacific LNG consortium that plans to export liquefied natural gas from Bolivia. However, the delays in that project make it unlikely that Bolivian gas would supply Costa Azul once its starts operations in 2007. Sempra is now in talks with five possible suppliers of LNG, Sempra Energy Global Enterprises president Donald Felsinger said in the conference call, adding that the company expects to have contracts signed for both Costa Azul and Cameron in either this quarter or in the first quarter 2004. Sempra executives were not available for comment Monday.