AES Gener keeps LNG option open

Chilean power company AES Gener has not ruled out the possibility of being an offtaker from state oil company Enap's proposed liquefied natural gas (LNG) re-gasification terminal in Chile's central Region V, CEO Felipe Cerón told reporters Thursday. Local generator Endesa Chile (NYSE: EOC) and natural gas distributor Metrogas signed an offtaker agreement with Enap on April 7. "We could still sign an agreement with Enap [to be a LNG offtaker]. It is an interesting initiative but we haven't made a decision yet," Cerón said. The re-gasification terminal, to be built at the port of Quintero in Region V, is a government initiative to reduce dependence on unstable Argentine natural gas imports. This year's gas export restrictions from Argentina, which amount to a third of what Chile normally imports from its Andean neighbor, will "without a doubt" negatively affect AES Gener's Q1 earnings, Cerón said. AES Gener operates the 380MW gas-fired Nueva Renca plant near capital city Santiago, which has been forced to use more expensive diesel fuel in recent months as a result of the gas cuts. COAL PLANT Faced with the gas shortages, Chile's government is encouraging investors to look at other energy sources to diversify the country's energy matrix, with coal an alternative. AES Gener is considering developing a 200MW coal-fired power project but Cerón did not reveal where the project would be, saying only it would be part of the country's central grid (SIC) system. Chile's government is considering a new electricity reform bill that would guarantee the country's electricity supply in coming years and reduce dependence on Argentine gas imports. The bill is an "additional ingredient" in the evaluation process of the coal-fired project, according to Cerón. "We think [the bill] is a good idea in order to develop new investments," he said. The bill would allow generators to obtain higher prices for their power, thus making new projects more viable. There has not been a new coal plant in Chile's SIC grid since AES Gener's 50%-owned Guacolda plant started operations in 1995.