SAN DIEGO, Dec. 21, 2001 /PRNewswire/ — Mexico’s Energy Regulatory Commission (CRE) today issued a natural gas transportation permit to the international subsidiary of Sempra Energy (NYSE: SRE) for the construction of the 135-mile Mexican segment of the North Baja Pipeline Project.

Sempra Energy International, Proxima Gas S. A. de C.V. and PG&E Corporation (NYSE: PCG) are developing the $230 million, 215-mile Arizona-to-Mexico pipeline. “Today’s action by the CRE demonstrates the government of Mexico’s strong support for this vital energy project,” said Darcel L. Hulse, senior vice president of Sempra Energy and president of the subsidiary, Sempra Energy International.

“We have now passed the major regulatory hurdle in Mexico, clearing the way to begin construction on the pipeline as soon as the U.S. Federal Energy Regulatory Commission (FERC) issues its permit for the U.S. segment. We look forward to bringing this much-needed, reliable source of natural gas supplies to the northern Mexico/Southern California region.”

In October, PG&E Corporation’s National Energy Group (NEG) filed an application with the FERC to build the 80-mile U.S. portion of the pipeline. “The northern Mexico and Southern California markets are at a critical point in the need for additional pipeline capacity, largely because of the increased use of natural gas to fuel electric generation,” said Thomas B. King, president and chief operating officer of the NEG’s western region.

“Construction of the North Baja Pipeline will help ensure that natural gas is available for those critically needed generation facilities, as well as for consumers who use gas directly in their homes or businesses. We hope our application for a FERC certificate to build the pipeline will be processed expeditiously, so that work can begin on this important new energy project,” King added.

The companies have signed precedent agreements for over half of the pipeline’s 500,000-decatherm capacity and discussions are ongoing with other potential customers. The project will begin at an interconnection with El Paso Natural Gas Co. near Ehrenberg, Ariz., traverse southeastern California and northern Baja California, Mexico, and terminate at an interconnection with an existing pipeline system. PG&E National Energy Group will direct the permitting and development of the U.S. leg of the pipeline, while Sempra Energy International will direct the permitting and development of the Mexican leg.

The initial design calls for a 36-inch pipeline for the first 12 miles and a 30-inch pipeline for the duration of the route, and one compressor station in Arizona. The companies are working with local communities to refine the route and design. Proxima Gas S.A. de C.V. is a private Mexican company that develops and invests in infrastructure projects of great economic impact in Mexico.

Sempra Energy International develops, operates and owns energy projects. The Company currently is involved in joint or solo ventures that provide natural gas and electricity services to more than 2.5 million customers in Argentina, Canada, Chile, Mexico, Peru, the United States and Uruguay.

In Mexico, Sempra Energy International and its partner, Proxima Gas, currently own and operate three natural gas distribution systems and one gas transmission pipeline, with the goal of reaching 125,000 customers by 2005. Sempra Energy International is a subsidiary of Sempra Energy, a Fortune 500 energy services holding company based in San Diego, Calif., with 12,000 employees, revenues of nearly $5.5 billion and more than 9 million customers in the United States, Europe, Canada, Mexico, South America and Asia.

SOURCE Sempra Energy International