QUINTERO, Chile -(Dow Jones)- The central Chilean liquified natural gas regasification project, known as GNL Quintero SA, is on schedule to come online in mid-2009 as scheduled, project General Manager Antonion Bacigalupo said Thursday.
"If we consider the work needed to begin operations in mid-2009, we've got 62% of the project completed and if we consider what's needed to operate at capacity in 2010, we've completed 49% of the work," Bacigalupo told reporters during a visit to the plant under construction.
GNL Quintero will begin importing 5 million cubic meters of gas a day when it comes online in 2009, rising to 10 million cubic meters a day in 2010. If the decision is made to increase investment in the project, the plant could import 20 million cubic meters a day of reliquified gas. The decision to go ahead with the increase will depend on demand, Bacigalupo said.
The project currently has contracts to supply 6.5 million cubic meters a day to state oil and gas company Empresa Nacional del Petroleo SA, or Enap; power producer Empresa Nacional de Electricidad SA (NYSE:EOC) (EOC), or Endesa; and gas distributor Metrogas SA (NYSE:MGS) (MGS). It currently is negotiating increasing their contracts to a joint 10 million cubic meters a day, Bacigalupo said.
The BG Group PLC (LSE:BG) (BG.LN) holds a 40% stake in GNL Quintero. Enap, Endesa and Metrogas (NYSE:MGS) each hold a 20% stake in the company.
The project isn't currently negotiating with any other firms to sign new contracts, Bacigalupo said.
The current contracted capacity is distributed evenly among the three consumers and there are negotiations to increase that contracted capacity to 10 million cubic meters a day, maintaining the equal proportions, Endesa General Manager Rafael Mateo told reporters during the visit.
The project will require an investment of about $1 billion, which will be financed through project financing. In March, GNL Quintero mandated nine banks to structure the financing for an amount slightly larger than the $1.0 billion and that process should be completed in June, Bacigalupo said.
Chile is going through an energy squeeze after neighboring Argentina, its sole supplier of natural gas, began reducing exports in 2004 to meet growing demand at home. Natural gas price freezes in Argentina have discouraged development of local production, and the country is itself increasingly relying on imports from Bolivia.
The shortage of natural gas and low water levels in Chilean hydroelectric reservoirs as a result of a drier 2007 and now 2008 have forced generators to rely heavily on diesel, which has sharply boosted electricity generation costs.
To diversify its fuel sources after the Argentina decision, the Chilean government is backing two LNG regasification plants.
-By Patricia San Juan, Dow Jones Newswires; 56-2-460-8544; chile@dowjones.com
(END) Dow Jones Newswires 05-15-08 1828 Copyright (c) 2008 Dow Jones & Company, Inc.
