Three FSRU providers make shortlist for Chile's Octopus LNG

Source: Heren

2014/03/27

Developers of the Octopus LNG import terminal planned for southern Chile have narrowed down options for the provision of a floating storage and regasification unit (FSRU) to a shortlist of three companies, with the aim of signing a formal agreement by the end of the year.

Norwegian ship owner Hoegh, maritime group BW and Texan FSRU developer Excelerate Energy, are each understood to have held discussions over the provision of an FSRU vessel for the project over recent weeks, ICIS understands.

The companies backing the Octopus project – US Cheniere Energy and Chilean Australis Power - are expected to select a preferred bidder over the second quarter of 2014, with the intention of signing a formal contract by the end of this year, a source in the Americas told ICIS.

Representatives from Hoegh, BW and Excelerate did not immediately respond to requests for comments.

Hoegh is understood to have two newbuild FSRU vessels available to charter from the end of next year onwards, although one is already understood to have been lined up for use in an import project planned for Colombia’s Caribbean coastline.

BW Maritime, a subsidiary of BW Group, also has two newbuild vessels due for completion at the end of 2015.

“Both BW and Hoegh could use their unsigned FSRUs as a good fit for Octopus. Excelerate, meanwhile, [has] existing vessels that could be used, and may look to develop a newbuild if required,” one shipping source told ICIS.

Octopus LNG is the first regasification project proposed for the south of Chile, and envisages construction of an FSRU in the Bay of Concepcion, about 500km south of the capital Santiago.

Send-out capacity has been estimated at 15 million cubic metres (mcm)/day, which would supply a proposed 1.14GW combined cycle gas-fired power plant and industrial users in the region.

Australis Power is leading the development of the gas-fired power plant, known as El Campesino. The company signed an agreement with French utility EDF last September to evaluate a potential joint development of the power project.

Cheniere is understood to be marketing future supplies for the project from its 13.5mtpa Corpus Christi LNG liquefaction plant proposed for the US Gulf coast.


Downstream demand expansion

Chile’s state oil and gas company Enap has reached a new offtake arrangement with several local distributors in an effort to underpin its expanded position at the Quintero LNG terminal on the country’s central coast.

The refiner has reached an agreement with six local distributors, through which it will deliver LNG via trucks to industrial locations across the central part of the country starting in the second quarter of this year, Enap said on 20 March.

The new business model accounts for roughly 30,000 cubic metre (cbm)/day of the company’s Quintero offtake. Further agreements could increase this industrial demand to 200,000cbm/day over the course of 2015, Enap said.

Enap elected to extend its current 3.3mcm/day Quintero offtake position by a further 1mcm/day in 2013 as part of a process to expand overall regasification capacity at the terminal by 5mcm/day to 15mcm/day

The rest of the capacity was shared between the terminal’s two other existing offtakers, Chilean distributor Metrogas and power utility Endesa Chile.

Capacity at the Quintero terminal will grow by a third once the expansion is completed in the final quarter of 2014. Managers at the terminal are expected to open another expression-of-interest round later this year, through which parties can express their interest in taking a further 1.25mtpa, or about 4.8mcm/day, in capacity made available through a second proposed expansion.

Local generator Colbun is among the parties expected to participate in the round, after failing in an attempt to take 0.5mtpa in new capacity made available through the first expansion phase. ( See GLM 5 December 2013 ). James Fowler