(Dow Jones) A Sempra Energy (SRE) unit signed a commercial development agreement with Mitsubishi Corp. (MSBHY, 8058.TO) and Mitsui & Co. (MITSY, 8031.TO) to construct a natural-gas liquefaction export facility at its Cameron LNG terminal in Louisiana.
The agreement provides funding for the development of the projects as well as requirements to negotiate a tolling agreement for a third of the anticipated output. Negotiations are in progress with other parties for the rest.
The U.S. Department of Energy in January had authorized Cameron LNG to export liquefied natural gas, opening the door wider to sell U.S. natural gas overseas where it may fetch higher prices.
The 20-year permit allowed Cameron, a wholly owned subsidiary of Sempra Energy, a California-based natural gas distribution and marketing company, to ship up to 1.7 billion cubic feet a day of LNG from its facility in Cameron Parish, La., to countries possessing free-trade agreements with the U.S.
The company is still waiting for federal permission to export LNG to any country that doesn’t have a free trade agreement with the U.S.
New drilling technologies such as horizontal drilling and hydraulic fracturing have unlocked new sources of natural gas in the U.S., increasing supply and helping to drive prices to a historic lows.
The agreement comes a day after Cheniere Energy Inc. (LNG) received federal approval to construct what would be the first major natural gas export facility in the lower 48 U.S. states.
The Federal Energy Regulatory Commission gave its approval for the construction of a liquefied natural gas export facility in Cameron Parish, La., clearing the final regulatory hurdle for Cheniere. Pending financing, Cheniere would become the only large-scale LNG exporter in the U.S.
Sempra shares closed Monday at $63.18 and were inactive premarket. Through Monday’s close, the stock is up 15% since the start of the year.
-By Tess Stynes, Dow Jones Newswires