Sempra Energy International, PG&E Corporation And Prã“Xima Gas, S.A. De C.V., To Develop Mexico Natural Gas Pipeline


SAN DIEGO and SAN FRANCISCO, June 12, 2000 - Sempra Energy International (NYSE: SRE), PG&E Corporation (NYSE: PCG) and Mexico's Próxima Gas, S.A. de C.V., today announced that they will join forces to build the proposed North Baja Pipeline, a $230 million, 212-mile natural gas transportation pipeline to serve growing energy demand in Baja California, Mexico.

The three companies have signed an interim agreement to jointly develop, design, construct and operate the proposed pipeline. 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 the Rosarito Pipeline south of Tijuana. The PG&E National Energy Group will direct development of the 77-mile U.S. leg of the pipeline, while Sempra Energy International will direct development of the 135-mile Mexican leg.

"We and Próxima Gas believe this is a critical project in integrating the energy markets of California and Northern Mexico," said Donald E. Felsinger, group president of Sempra Energy and chairman of Sempra Energy International. "By developing this new pipeline with PG&E Corporation - our third project in Baja California - we will link our existing natural gas assets in Rosarito and Mexicali and expand our capacity to deliver a clean, reliable source of energy that will spur economic development and improve air quality in the border region."

"This pipeline will deliver much-needed natural gas supplies to Northern Mexico, where demand is growing rapidly, providing a new link between Southwest U.S. natural gas supplies and the Mexico market," said Thomas B. King, president, West Region, for the PG&E National Energy Group. "For PG&E Corporation's National Energy Group, the project will broaden our presence as a natural gas transportation provider in western North American markets."

If approved, the proposed pipeline could be in service as early as January 2003, with a gas transportation capacity of approximately 400 million cubic feet per day at rates competitive with existing alternatives. The initial design calls for a 30-inch pipeline and one compressor station in Arizona.

The U.S. segment of the pipeline will be regulated by the U.S. Federal Energy Regulatory Commission and the Mexican segment by the Mexican Energy Regulatory Commission (CRE). Sempra Energy International filed for a natural gas transportation permit with the CRE in March of this year.

The primary target markets for the pipeline are power plants and energy-intensive industries in Baja California. Currently, the Mexican Federal Electricity Commission (CFE) has plans to convert the existing Presidente Juárez Power Plant in Rosarito, Baja California, to natural gas from oil. In addition, the CFE has solicited offers from independent developers to build 500 megawatts of new natural gas-fired electric generation in Baja California.

Increased use of clean-burning natural gas at power plants and industries in the region will improve air quality by reducing emissions in the San Diego/Tijuana border area. Currently, manufacturing plants and residents in Baja California rely primarily on propane and fuel oil for industrial boilers and cooking.

Sempra Energy International and Próxima Gas have been pioneers in Mexico's energy market. The companies currently own and operate four energy businesses in Mexico, including natural gas distribution systems in Mexicali, Baja California, Chihuahua and the states of Coahuila and Durango, as well as the pipeline from San Diego to the Rosarito Power Plant in Baja California.

The North Baja Pipeline consortium will hold an open season beginning in mid-June to solicit bids for capacity on the proposed pipeline. Prospective customers should contact Henry Morse of the PG&E National Energy Group (503-833-4108), or Ryan O'Neal of Sempra Energy International (619-696-4585) to receive an open-season package.

PG&E Corporation, with revenues of more than $20 billion and operations in 21 states, markets energy services and products throughout North America through its National Energy Group. One of the largest U.S. transporters of Canadian natural gas, the Corporation owns and operates a 612-mile dual pipeline system in the Pacific Northwest. PG&E Corporation's businesses also include Pacific Gas and Electric Company, the Northern and Central California utility that deliver natural gas and electricity to one in every 20 Americans.

Próxima Gas S.A. de C.V. is a private Mexican company that develops and invests in infrastructure projects of great economic impact in Northern 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. 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 and South America.


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