Sempra Commodities signs marketing agreement with Etanalc S.A. for Brazilian ethanol

Oct 8, 2007

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        STAMFORD, Conn., Oct. 8, 2007 -- Sempra Commodities, the commodity-marketing unit of Sempra Energy (NYSE: SRE), today announced it has executed a 20-year agreement with Etanalc S.A. to market the ethanol production from three new ethanol distilleries being developed by Etanalc.
 
        Etanalc expects each ethanol plant will be supported by 30,000 hectares of land and 3 million tons of sugar-cane production, as well as co-generation of electrical energy, using the sugar-cane residue.  The first three distilleries will be located in Pedro Afonso, Colinas and Guarai in the state of Tocantins, Brazil, with ethanol production estimated to begin in 2010.

        Under this agreement, Etanalc will provide Sempra Commodities with approximately 190 million gallons (4.5 million barrels equivalent) of ethanol per year, after the aforementioned three plants have been operating for three years. 
 
        Sempra Commodities retains the right to purchase any ethanol produced above anticipated production.  Sempra Commodities also expects to be a shareholder in the project.
 
        “As the United States and other countries embrace the development of all forms of renewable energy, we expect the ethanol market to grow rapidly and be a meaningful component of the global energy mix over the next decade,” said Bryan Keogh, vice president and treasurer of Sempra Commodities.  “This represents a growth opportunity Sempra Commodities can actively pursue as part of the joint-venture the company is forming with the Royal Bank of Scotland Group.“
 
        The joint venture, RBS-Sempra Commodities LLP, which was announced in July 2007 and is slated to be completed in the fourth quarter 2007, is expected to significantly expand Sempra Commodities’ market opportunities with new commodity lines and a broader geographic reach.  
 
        Ethanol is a non-toxic, water-soluble and quickly biodegradable fuel that, when blended into gasoline, is effective in reducing motor-vehicle emissions.  Ethanol comprises about 3.5 percent of the total annual U.S. gasoline consumption of 140 billion gallons.  Approximately 46 percent of all U.S. gasoline contains some ethanol content, according to industry sources. Headquartered in Rio de Janeiro, Etanalc S.A. was formed by Aureo Luiz de Castro for the purpose of developing this project.  Brazil is the world’s largest exporter of ethanol.  Based in Stamford, Conn., Sempra Commodities (comprised of Sempra Energy Trading LLC and its managed companies) is a leading participant in marketing and trading physical and financial commodity products, including natural gas, power, coal, oil, oil-related products and base metals. 

        Sempra Commodities combines trading and risk-management experience with physical-commodity expertise to provide innovative solutions for its customers worldwide.
 
        Sempra Energy, based in San Diego, is a Fortune 500 energy services holding company with 2006 revenues of nearly $12 billion.  The Sempra Energy companies’ 14,000 employees serve more than 29 million consumers worldwide.  


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This press release contains statements that are not historical fact and constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  When the company uses words like “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates,” “may,” “would,” ”could,” “should,” or similar expressions, or when the company discusses its strategy or plans, the company is making forward-looking statements.  Forward-looking statements are not guarantees of performance.  They involve risks, uncertainties and assumptions.  Future results may differ materially from those expressed in the forward-looking statements.  Forward-looking statements are necessarily based upon various assumptions involving judgments with respect to the future and other risks, including, among others: local, regional, national and international economic, competitive, political, legislative and regulatory conditions and developments; actions by the California Public Utilities Commission, California State Legislature, California Department of Water Resources, Federal Energy Regulatory Commission, Federal Reserve Board, U.K. Financial Services Authority and other environmental and regulatory bodies in the United States and other countries; capital market conditions, inflation rates, interest rates and exchange rates; energy and trading markets, including the timing and extent of changes in commodity prices; the availability of natural gas and liquefied natural gas; weather conditions and conservation efforts; war and terrorist attacks; business, regulatory, environmental, and legal decisions and requirements; the status of deregulation of retail natural gas and electricity delivery; the timing and success of business development efforts; the resolution of litigation; and other uncertainties, all of which are difficult to predict and many of which are beyond the control of the company.  These risks and uncertainties are further discussed in the company’s reports filed with the Securities and Exchange Commission that are available through the EDGAR system without charge at its Web site, www.sec.gov and on the company’s Web site, www.sempra.com.
      
Sempra Energy Trading, doing business as Sempra Commodities, and Sempra Generation are not the same companies as the utilities, SDG&E or SoCalGas, and the California Public Utilities Commission does not regulate the terms of their products and services.

 


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