Chile's Mejillones LNG terminal to start flexible access

12 December 2013 16:10 Source:ICIS

The operating company of the Mejillones LNG terminal in northern Chile has introduced a new short-term access delivery model for companies looking to import LNG on a spot basis starting in 2014.

Under the “slot spot” initiative, natural gas consumers will be able to regasify LNG cargoes at the terminal without previously securing slots in the terminal’s annual delivery programme (ADP), GNL Mejillones CEO Jean-Michel Cabanes told ICIS.

“The idea is that the company can request to use the terminal to bring in any quantity of LNG, as long as its proposed delivery does not clash with those already scheduled in our ADP, and doesn’t impinge upon the interests of our existing users,” Cabanes said.

The slot spot initiative is planned to serve the fluctuating natural gas needs of power generators on the country’s northern power grid, he said. In addition, it will serve industrial consumers such as mining companies, he added.

“If commodity prices change rapidly and LNG becomes more cost-efficient for generators, or a coal-fired power plant goes offline, companies will be able to bring in cargoes on a one-off basis and use our terminal to regasify the volumes. The idea is that we can be flexible with the changing demand picture,” Cabanes said.

Third-party access advances

The implementation of the new programme marks the latest step in a process to open up access to the Mejillones terminal to third parties.

Under a new business model which came into force this year, companies are free to sign their own LNG supply contracts and use the Mejillones facility to regasify imports in exchange for a rental fee.

Eight cargoes are currently scheduled for delivery during 2014, according to the latest Mejillones schedule. The majority of these cargoes have been purchased by power generator E-CL through its long-term supply agreement with parent company GDF SUEZ, and a more recent, short-term commitment from British seller BP.

Chile’s state copper producer Codelco is also understood to have secured one or two cargoes for delivery at Mejillones over the course of 2014 ( see GLM 17 October 2013 ).

In the longer term, Australian mining giant BHP Billiton and the local arm of Spanish power generator Endesa are also understood to have signed terminal use agreements for future capacity use.

Infrastructure and expansion

As part of the new business model, GNL Mejillones has outlined plans to expand regasification capacity at the terminal from 5.5 million cubic metres (mcm)/day at present to 8.5mcm/day in the future.

New marketing initiatives, such as the installation of small to mid-scale LNG facilities and infrastructure for the loading of LNG-carrying trucks, have been proposed to shore up sufficient demand for the expansion.

GNL Mejillones has discussed the idea of developing truck loading facilities with the capacity to handle up to 15 trucks a day with a separate company, Cabanes said, although the idea has yet to progress into a firm business commitment.

“We have yet to make a firm decision on the construction of a truck loading facility, however once we do we could have the infrastructure up and running within six months. It remains possible that something could be developed before the end of next year,” he said.

The centrepiece of the terminal’s new business model has been the construction of a 175,000cbm onshore storage tank. The new tank is set to commence cool-down operations in the coming days, according to Cabanes, and will begin commercial operations in the new year.

Paris-based energy group GDF SUEZ owns a 63% stake in the GNL Mejillones operating company; Codelco holds the balance.

By James Fowler