Chilean buyers extend Quintero LNG capacity leaving Colbun in the cold

05 December 2013 13:27 Source:ICIS

The existing three offtakers at the Quintero LNG terminal on Chile’s central coast have agreed to split 1.25mtpa in new regasification capacity between them, frustrating the ambition of power generator Colbun, which had been vying for future access to the terminal.

The local arm of Spanish generator Endesa, gas distributor Metrogas and Chile’s state-owned refiner ENAP have each agreed to extend their existing Quintero offtake stakes as part of an expansion programme, which will take terminal capacity from 2.5mtpa to 3.75mtpa by the fourth quarter of 2014.

Endesa is understood to have secured close to 2.8 million cubic metres (mcm)/day in extra capacity, over half of the 5mcm/day made available through the expansion. Metrogas, meanwhile, is understood to have secured 1.6mcm/day, leaving ENAP with 0.6mcm/day.

Initial negotiations had focused on the three companies maintaining the current balance and splitting the new capacity equally. However, ENAP’s commitment to expanding its existing position became less certain as talks progressed, due in part to pressure from power generator Colbun which had been seeking access to the terminal.

“Endesa agreed to take the extra capacity that ENAP didn’t want. ENAP’s demand is light compared to the other two parties, and they didn’t want to entertain the risk of securing an excessive quantity,” a source in Chile told ICIS.

The extra capacity taken by ENAP puts the company in a position to fulfil a future role as a state-controlled LNG buyer, an idea which has been proposed by the two candidates in the country’s upcoming Presidential election on 15 December. ( see GLM 28 November ) Generators such as Colbun may continue to use ENAP as an importing agent, given the state company’s decision to extend its foothold in the terminal.


The inability to secure access at Quintero is a blow to Colbun, the third-largest generator on Chile’s Sistema Interconectado Central (SIC) power grid. The company had recently been involved in a round of talks with several international companies over the supply of 500,000 tonnes per annum at Quintero from the end of 2014 onwards, and had been looking to secure a firm supply commitment before the end of this year.

Colbun could instead revive plans to develop a separate floating storage and regasification unit (FSRU) import facility close to Quintero, alongside fellow generator AES Gener.

Colbun first revealed plans for the project in early 2012, and in September of that year selected Norwegian shipowner Hoegh as the preferred supplier of an FSRU vessel.

However, further progress on the project has since stalled, and sources in Chile have suggested that Colbun had sought to use the project as a way of forcing Quintero offtakers into ceding future access to the facility.

Aside from developing its own project, Colbun could also wait for managers at Quintero to approve a further expansion of the facility up to 5mtpa. Equity holders in the terminal have talked about pushing ahead with this proposed expansion in the longer term, and sources in Chile say a decision could be taken as early as next year.

In the short term, Colbun will likely have to continue relying on the use of ENAP or Metrogas as an import agent. Both ENAP and Metrogas have acquired cargoes on the spot market through the GNL Chile marketing consortium which handles Quintero imports, in order to satisfy extra gas demand from Colbun and other generators on the country’s SIC power grid.

Gas demand has intensified over recent years due to an ongoing drought across the central and southern part of the country, which has reduced water levels at many of the SIC’s hydroelectric generation plants.

By James Fowler