Interview with Octávio Simões, President, Sempra LNG

The flexibility of gas generation to support the renewables development and the environmental advantages of gas versus coal and oil are not being deployed successfully. Part of the problem has to do with the recent high prices of LNG as the linkage to oil caused the cost to skyrocket when went up in price.

1. How is the requirement of buyers to seek out shorter term contracts affecting project financing?

Given the size of the capital requirements to launch a liquefaction project, short-term contracts do not support the
development of new supply. The size of the commitment can be mitigated by establishing contracts for the
infrastructure only, such as in the US projects, but not the commodity, what we typically designate as the cost-plus
model. This allows new supply to be developed on a timely basis and avoid the “Buyer’s market – Seller’s market”
cycles.
2. How eectively are gas and LNG competing for their rightful place alongside coal and renewables?

The simple answer is that in my opinion gas is not competing eectively. The flexibility of gas generation to support
the renewables development and the environmental advantages of gas versus coal and oil are not being deployed
successfully. Part of the problem has to do with the recent high prices of LNG as the linkage to oil caused the cost to
skyrocket when went up in price. Another element of the failure has to do with a lack of industry advocacy and
coordination to assign real carbon costs to the fossil fuels being considered.
3. What are Sempra’s main reasons for sponsoring the World LNG Summit this year?

We regard the World LNG Summit as the premier annual gathering of the industry participants. It provides us with an opportunity to get together with everyone at the end of each year and make an assessment of where we are and the
challenges ahead. And we have been supporting the event in dierent ways for more than a decade. As Sempra
continues to expand its footprint in the LNG industry, we remain committed to advance the industry and contribute
to maintain the high levels of performance, safety and reliability that this industry has demonstrated in the past.

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