Sempra (NYSE:SRE)
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2 Years : From May 2010 to May 2012
Sempra Energy (SRE) said Monday that a Mexican federal court has ordered government agencies to suspend the company's operating permits for its liquefied natural gas terminal there, signaling that a land dispute between Sempra and a local rancher may not be moving in the company's favor.
In an order dated Thursday, a Mexican federal district court directed Mexican government agencies to temporarily suspend authorizations for the operation of Sempra's liquefied natural gas terminal near Ensenada, Mexico, pending further legal proceedings.
Kathleen Teora, a spokeswoman for Sempra's LNG unit, said Monday that although the company is aware of the court order, it hasn't received an official copy of the order.
"We'll continue operations until we hear otherwise," Teora said.
Sempra's Costa Azul LNG import terminal near Ensenada, which has been operating since 2008, can process up to one billion cubic feet of natural gas a day.
San Diego-based Sempra has been locked in a legal battle with Ramon Eugenio Sanchez Ritchie over ownership of a 250-acre parcel of land near the LNG terminal that Sempra bought in 2006 but that Ritchie claims belongs to him. Sempra has said that it doesn't need the land to operate the LNG terminal. The company also has accused Ritchie of pursuing ownership claims to extract money from the company.
Ritchie has insisted that Sempra needs the land to operate the LNG terminal, and that the company has wronged him and should pay monetary damages to compensate him for it. Ritchie and his lawyers have been pushing for Sempra to shut down the plant. It was unclear how the court order will affect Sempra's LNG terminal, which provides natural gas to a government-owned electric utility.
Ritchie spokesman C.E. Cortes said Monday that Mexican authorities are due to order Sempra to shut the LNG facility.
The order was issued in response to a petition Ritchie filed that accused Sempra of operating the LNG terminal in violation of Mexican environmental regulations.
Teora said court officials in Ensenada allowed a Sempra attorney to view the order but didn't allow him to make a copy of the order.
After a four-year criminal trial, a Mexican court tribunal ruled May 25 that Ritchie is the rightful holder of the disputed land and ordered the property be restored to his possession. Sempra is still pursuing the ownership case in Mexican civil court.
The dispute has raised the ire of some Mexican newspapers, which have hailed the May 25 decision as a local victory. A May 30 article in Mexican newspaper La Jornada said that Sempra "committed real estate fraud" that was "unmasked by a tribunal."
Sempra provides the government-owned utility Comision Federal de Electricidad with about 130 million cubic feet a day of gas from the LNG terminal under a 15-year contract worth an estimated $1.4 billion over the life of the contract, according to Sempra.
In addition to its LNG business, Sempra owns utilities San Diego Gas & Electric and Southern California Gas, a power-generation unit, a gas-pipeline business, and half of a commodities-trading joint venture with Royal Bank of Scotland Plc (RBS, RBS.LN) called RBS Sempra Commodities. The two partners are in the process of selling the joint venture.
Sempra shares fell 1.5% to close at $49.33.
-Cassandra Sweet, Dow Jones Newswires; 415-439-6468; cassandra.sweet@dowjones.com
(Tom Fox in Bangkok contributed to this article)