Sempra Energy International Wins La Laguna-Durango Natural Gas Project.

SAN DIEGO--(BUSINESS WIRE)--May 18, 1999--

The Mexican Energy Regulatory Commission (CRE) today awarded the license to build and operate a natural gas distribution system in the La Laguna-Durango geographic zone in north-central Mexico to Distribuidora de Gas Natural de La Laguna-Durango S. de R.L. de C.V. (DGN), wholly owned by Sempra Energy International.

The La Laguna-Durango natural gas distribution system is unique in that it will span two states in Mexico, serving the city of Torreon in the state of Coahuila, and the cities of Gomez Palacio, Lerdo and Victoria de Durango in the state of Durango. Sempra Energy International will invest over $40 million in the project to reach 50,000 customers by the fifth year of operation.

"The La Laguna-Durango project solidifies our position in the Mexican energy market and fits perfectly with our strategy of becoming the No. 1 privately owned, fully integrated provider of energy services in northern Mexico," said Donald E. Felsinger, group president, unregulated affiliates, for Sempra Energy. "We have demonstrated our ability to build, design and operate successful energy projects in Mexicali, Chihuahua and Rosarito. This latest natural gas distribution system will extend our reach to a total of over 125,000 Mexican customers within the next five years."

As part of its license, Sempra Energy International will acquire 43 kilometers of existing steel transmission pipeline for $7.8 million from Pemex, Mexico's state-owned oil company. This pipeline currently serves 22 industrial customers with 14 million cubic feet per day of natural gas. The U.S. company is expected to take over operations of the pipeline on June 21, 1999.

The La Laguna-Durango natural gas system is linked to the same transmission pipeline that serves Sempra Energy International's distribution system in Chihuahua, with access to gas supplies from the United States.

"We are pleased to be on the leading edge of Mexico's efforts to expand energy options for its residential and business customers," said Felsinger. "As Mexican energy demand increases, and the energy markets of Mexico and the United States become more intertwined, we look forward to providing fully integrated energy solutions to even more customers in northern Mexico."

The geographic zone of La Laguna-Durango has a population of approximately 1.1 million, and is home to several energy-intensive industries, such as metallurgy, foodstuffs, textiles and timber harvesting.

Sempra Energy International currently is a partner in three other energy projects in Mexico: a gas distribution system in Mexicali, Baja California, that will reach 25,000 customers by 2002; a similar system in the state of Chihuahua that will reach 50,000 customers by 2002; and a 10-year agreement with the Mexican Federal Electric Commission to build a 23-mile pipeline and supply gas to the Presidente Juarez Power Plant in Rosarito, Baja California. The company employs 150 Mexican nationals and five full-time Sempra Energy International employees in Mexico.

Sempra Energy International develops, operates and owns energy projects outside the United States. The company currently is involved in natural gas transmission and distribution in Mexico, Argentina, Chile and Uruguay; electricity generation in Argentina; and electricity distribution in Chile and Peru. Sempra Energy International is a subsidiary of Sempra Energy (NYSE:SRE), a Fortune 500 energy services holding company, based in San Diego, with 12,000 employees, revenues of $5.5 billion and more than 6 million natural gas and electric meters serving 21 million customers.