The project will rise in Baja California, about 60 miles south of San Diego. It will be the first liquid natural gas terminal on the West Coast and also mark the increasingly important role that Mexico is playing in the efforts to solve the energy shortage facing not just California but many other parts of the western US.

The plant will be build by a partnership of Sempra Energy--parent of LA-based Southern California Gas Co. and San Diego Gas & Electric--and CMS Energy Corp. Michigan-based CMS has built dozens of natural gas and electric projects all over the world.

The partners say the Baja California facility could become operational by 2005, after a crucial pipeline that would run hundreds of miles across the border is built. However, the plan could face opposition from residents of Baja California as well as from environmentalists.

The Mexican government itself has given such proposals its support. Mexico is expected to run into energy problems of its own within the next few years, as that nation continues to wean itself from fuel oil in favor of cleaner-burning natural gas.

Energy analysts believe there are vast deposits of natural gas under many parts of Mexico, but say that the Mexican government doesn't have the cash or technical know-how to tap them.