CAP to make LNG plant decision in 2013

Thursday, May 24, 2012

Chilean iron ore and steel group CAP (BCS: CAP) will not make a decision on the construction of what would be Chile's fourth LNG regasification terminal until next year, a spokesman for the company told BNamericas.

The firm's president Jaime Charles told local press earlier this week that it is studying the construction of a terminal in order to cover growing energy demand from the company's mining and steel processing operations. However, the company source told BNamericas that plans remain in an early stage, with the project deemed a mid-term priority.

"These are very preliminary studies. The decision will be taken within the next 12 months. The plant could be built in the north or south of Chile; we have not rejected any alternative yet," the spokesman said.

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Under current plans, the firm would use the gas to fire a new thermo plant, in order to supply energy to the company's expanding operations.

"We could also sell the excess generation," the spokesman added.

Press reports suggest up to US$1bn could be invested in the project, with operations beginning in 2018.

Chile currently has two operating LNG regasification terminals: Mejillones, which supplies gas to the north of the country, and Quintero in central region V.

Chilean generator GasAtacama recently submitted an EIA for what would be the country's third facility in the north of the country. The company is planning to invest over US$500mn developing an FRSU 2km off the coast in the Mejillones bay, and connect to the firm's 780MW Central Térmica Atacama thermo plant through an underwater pipeline.

Power companies in Chile are increasingly turning to LNG as a potential fuel source in the belief that the recent consolidation of US gas reserves following increased development of unconventional shale resources and the proposed start up of several North American export programs will make shipments cheaper.

"The market is currently very strong, there are projects being built all over the world at the minute," the CAP spokesman added.