Oil & Gas - Chile

Golar chief highlights growing LNG demand following GasAtacama FRSU contract

Golar chief highlights growing LNG demand following GasAtacama FRSU contract

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A stable regulatory framework and soaring power demand makes Chile an increasingly important market for the global LNG trade, according to Doug Arnell, CEO of UK independent operator Golar LNG.

"Chile is a great country for LNG. The country has the right kind of regulatory framework, legal structure and dynamic for the business, as well as growing demand," Arnell told BNamericas on the sidelines of a press conference in Santiago.

Chile currently has two functioning regasification plants, the onshore Quintero terminal in central region V and the offshore LNG Mejillones plant in region II. LNG, however, remains a relatively new component in the country's energy matrix with the first plant only coming online in 2009.

Generator and gas distributor GasAtacama is also in the early stages of developing a third plant alongside Mejillones in the north of the country, and further terminals have also been touted by generator Colbún and iron ore and steel group CAP (BCS: CAP).

According to Arnell, any future plants are likely to be developed offshore due to the relative size of the Chilean market, and the ease of establishing the plants.

"Because of the increased costs of building a land-based terminal, they are only appropriate in countries with significant market demand. For a small sized market such as [northern Chile] a land-based terminal is impossible," he said.

"The execution paths for floating projects are quicker than land-based terminals. Because it is offshore, permitting issues are also easier as it is safer."

GASATACAMA

Golar on Thursday signed a contract with GasAtacama to supply a floating regasification and storage unit (FRSU) for the latter's proposed LNG import project envisaged for northern region II.

Under the terms of the contract, the UK-based firm will supply the FRSU, currently being constructed by Samsung in South Korea, and operate and maintain the plant for a period of up to 20 years.

GasAtacama also holds an option to purchase the terminal outright as part of the US$350mn deal.

Shipments into the 170,000m3 capacity FRSU will be used to meet power demand from expanding mining operations on the northern SING grid. Demand on the SING is expected to double over the next 10 years and GasAtacama hopes to begin supplying the new mining facilities as they come online from 2016 onwards.

Output from the regasification unit would start at 5Mft3/d (141,584m3/d) with the ability to increase production up to 10Mft3/d. The company anticipates that this output will fuel generation of at least 1GW in installed capacity, and the firm's CEO Rudolf Araneda told reporters that the project is open for other generators to farm in.

Supply contracts of up to 20 years with a value in excess of US$5bn are envisaged by the Chilean firm.