Chile’s ENAP re-evaluates plans for San Vicente Bay LNG terminal

03 July 2014 | By: James Fowler

Chile’s state refiner ENAP is evaluating the development of a third LNG import terminal in the south of the country as part of an energy policy recently outlined by the country’s newly elected government.

The location of the terminal is, however, likely to bring the project into direct competition with a separate proposal put forward by local companies in association with US LNG export developer Cheniere Energy, known as GNL Penco.

Doubts over the financial and technical capabilities of ENAP also leave huge questions hanging over the prospect of the project’s development. In reality, ENAP’s proposals are likely to be considered as a back-up option to the proposed GNL Penco floating import facility, several Americas-based sources said.

ENAP’s plans envisage the installation of an import terminal with regasification capacity of up to 2mtpa in the San Vicente Bay area of southern Chile.

The project will make use of an existing liquefied petroleum gas (LPG) pier operated by ENAP for the import of refined products and could be developed either as an onshore or offshore project with use of a floating storage and regasification unit (FSRU).

Under current proposals being considered, supply for the terminal could be provided by small-scale LNG vessels with a capacity of around 10,000 cubic metre (cbm) delivering volumes from the existing Quintero terminal on Chile’s central coastline, ICIS understands.

ENAP is one of five shareholders in the Quintero terminal, alongside local gas distributor Metrogas, power generator Endesa Chile, Spain’s Enagas and Oman Oil Co. ENAP, Endesa and Metrogas are also the existing capacity holders in the facility.

An initial expansion phase, taking Quintero capacity from 2.5mtpa to 3.75mtpa, will be completed by the end of this year. A further expansion to increase capacity to 5mtpa will be decided upon in the second half of this year.

Discussions over the Quintero expansion have also included the potential installation of loading facilities for small-scale LNG vessels, although a final decision has yet to be taken, sources in Chile said.

The location of a new terminal in the San Vicente Bay area would aim to supply natural gas to the Concepcion region of southern Chile. However, the site for the project is located just to the south of GNL Penco, which was formerly known as Octopus LNG.

Santiago-based project developer Andes Mining and Energy, alongside Cheniere, envisages the construction of a 10 million cubic metre (mcm)/day capacity send-out terminal which would supply gas to a purpose-built power plant located in the bay of Concepcion. Cheniere is understood to be considering supplying the scheme with its planned Corpus Christi greenfield export facility in Texas.

The construction of a gas-fired power plant alongside the regasification terminal would underpin most of the demand for the GNL Penco scheme. However, both an ENAP import terminal and GNL Penco would also compete for market share within the Concepcion region.

Industrial and commercial consumption in the region has been put at only 2mcm-3mcm/day by sources in Chile, indicating limited opportunities for both projects to coexist.

ENAP’s delicate financial situation also leaves the company under-resourced to be able to construct the terminal on its own, sources in Chile told ICIS. 

ENAP markets Quintero capacity

Beyond proposing its own terminal, ENAP is understood to be currently holding negotiations with local power generator Colbun for the sale of between 1.1mcm-1.5mcm/day of offtake at the Quintero terminal from next year onwards, according to sources in Chile.

Under the terms of the agreement, Colbun would purchase gas directly from ENAP, with the state company supplying the generator with volumes delivered by Quintero’s term supplier BG Group.

Colbun would then use the volumes to power part of the company’s 800MW Nehuenco power complex located close to the Quintero terminal.

Colbun has previously proposed its own LNG import terminal to sit alongside the Quintero facility, selecting Norwegian shipowner Hoegh as the preferred supplier of an FSRU vessel for the project in September 2012.

Since then, however, progress on the FSRU has fizzled out, with the Chilean company instead focusing its attention on securing access to the Quintero terminal.

An agreement between Endesa Chile and ENAP to divide 1.6mcm/day in regasification capacity coming on line as part of the first expansion phase at Quintero ended Colbun’s interest in securing direct capacity to the terminal late last year.( See GLM 5 December 2013 ).

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