Enap CEO: Chile must expand LNG import capacity

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Tuesday, June 23, 2015

Chile must increase its LNG regasification capacity, according to the CEO of national oil company Enap, Marcelo Tokman.

Growth in gas demand from the electric power sector will far exceed LNG import capacity in the coming years, Tokman said at an event in capital Santiago.

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One of the signature goals of the government's 2014-18 energy agenda is a shift away from coal and oil, and toward natural gas as a source of thermoelectric power generation, with Enap as the catalyst.

While Enap has historically focused on E&P and refining, a new business unit called Gas y Energía is devoted to LNG and power generation, the latter mainly referring to combined cycle gas turbine (CCGT) and geothermal projects.

Enap holds a 20% ownership stake in the Quintero LNG import terminal (pictured), and is seeking a partner to finance, build and operate the 500MW Nueva ERA and 760MW Luz Minera CCGT projects.

While wind and solar projects have flourished in the last two years, Chile has struggled to bring online the base load projects that will be necessary to meet projected demand growth over the coming years, Tokman said, explaining that thermoelectric plants currently under construction on the northern SING and central SIC grids have already contracted the majority of their supply.

Through a tender announced in May, national energy commission CNE plans to award long-term power purchase agreement (PPA) contracts to generators in 2016 for the supply of 13,750GWh/y to residential clients, with contracts taking effect in 2021 and 2022.

Of this total, the hope is that 7,400GWh/y will come from existing plants whose current contracts will have expired. The remainder, Tokman said, will need to come from new projects.

This leaves little time for the completion of CCGT projects currently in the pipeline such as El Campesino and Los Rulos, Tokman said, along with Enap's CCGT projects.

The use of natural gas in the Chilean energy mix dropped off sharply after 2008, when Chile's principal gas supplier at the time, Argentina, abruptly shut off the tap to its Andean neighbor. Partly as a result, Chile invested in LNG infrastructure and now boasts two LNG import terminals: Mejillones (5.5Mm3/d) and Quintero (15Mm3/d).

Enap is currently drawing up an open season tender for a contract to expand Quintero's capacity to 20Mm3/d, Tokman said.

In addition, Chile is awaiting news on the planned GasAtacama and Penco Lirquén floating regasification and storage units (FRSUs).