Gas Market Dynamics

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Gas Market Dynamics The Ups and Downs

• March 11, 2009
• Darcel L. Hulse
• President and CEO

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Safe Harbor Statement
This presentation 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, the California State
Legislature, the California Department of Water
Resources, the Federal Energy Regulatory
Commission and other regulatory bodies in the
United States and other countries capital
markets 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 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.
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Asia Industrial Production Indices
S. Korea
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Asia Industrial Production Indices
S. Korea
Taiwan
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Asia Industrial Production Indices
S. Korea
Japan
Taiwan
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Asia Industrial Production Indices
Asia LNG
Asia LNG seasonally adjusted.
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LNG Forecast
Asia Demand
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LNG Forecast
Asia Demand
Recession
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Europe Industrial Production Indices
Eurozone
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Europe Industrial Production Indices
Eurozone
Spain
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US Industrial Production Index
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Commodity Price History
Recessions
Indices adjusted by CPI.
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US Gas Rig Count
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Japan LNG vs. U.S. Gas Prices
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Japan Cumulative LNG Cost at Actual and Henry Hub
Prices
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Korea vs. U.S. Natural Gas Prices
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Korea Cumulative LNG Cost at Actual and Henry Hub
Prices
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Platts Asia Daily Spot LNG Japan/Korea Marker
(JKM)
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Europe Pipeline Imports vs. U.S. Natural Gas
Prices
Henry Hub
Europe Pipeline
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Europe Cumulative Actual Pipeline Cost and Henry
Hub Prices
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Changes in Forward Prices and Forecasts for
December 2009
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Current Price Forecasts
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Summary

• The current economic crisis is leading to a
  significant reduction in LNG demand in Asia,
  which may fall below minimum contract quantities.
• Few if any spot cargo sales will be made to
  Japan, South Korea, or Taiwan through 2009.
• Europe gas demand will also fall, particularly in
  Spain, but lagging oil-based pipeline contract
  prices will continue to support LNG spot prices
  in Europe and the UK for a few more months.
• New liquefaction capacity and lower global
  demand will sharply increase LNG flows to the
  U.S. this year.
• Gas prices will be low in the US, but the
  unprecedented rate that drilling rigs are being
  laid down means that prices should not be low for
  long.
• Absent another oil price bubble North America gas
  prices should return to the pre-2008 situation of
  being competitive with prices in Asia and Europe.