Metrogas terminates gas supply contract

Tuesday, September 29, 2009

Chilean natural gas distributor Metrogas has terminated its contract with Argentine natural gas transporter TGN and Argentina's Aguada Pichana consortium made up of natural gas producers Total (NYSE: TOT), Pan American Energy (PAE) and Germany's Wintershall, according to letters filed with Chilean securities regulator SVS.

Metrogas terminated the contract due to the companies' repeated failure to meet contractual obligations, the letter said.

The distributor will stop monthly take or pay transportation payments made to TGN of US$2.65mn and could seek damages for breach of contract worth a preliminary US$202mn, the letters said.

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Metrogas said it would continue to guarantee supply to its customers through the new LNG regasification plant in the central port of Quintero.

The companies have been under contract since 1997. Argentina began to limit natural gas exports to Chile in 2004, and local press has reported that no Argentine gas is currently being exported to Chile.