Chile Regas Terminal Prepares To Unload First LNG Shipment
July 13 2009 - 6:08PM
Dow Jones News
GNL Quintero, South America's first liquefied natural gas
regasification terminal, will start unloading its first shipment of
LNG this week, said Gavin Garcia, chief operating officer of GNL
Chile, the consortium in charge of selling the gas to customers in
Chile.
The ship, the Methane Jane, which arrived from Trinidad and
Tobago with a cargo of 145,000 cubic meters of LNG, berthed on
Sunday and the gas will be piped ashore through a 1,850-meter
pipeline.
Most of the first shipment will be used for testing and
commissioning the terminal, with full operations scheduled to start
in late August, said Garcia.
The berthing went "very smoothly" with the ship pointing out to
sea, which is normal in case of bad weather or heavy sea swells
that could require the ship to leave temporarily, said Garcia.
"The commissioning process always has some degree of uncertainty
associated with it but we are looking forward to a smooth process,"
he said.
Permit problems had threatened to delay the project after the
mayor of Quintero, where the regasification plant is located, gave
an order to close and vacate the plant, posing a setback for the
project just as it was about to receive its first shipment of
LNG.
The mayor said GNL Quintero lacked construction permits, but the
company said that it hasn't applied for the permits since the plant
isn't operational and a local court ruled last week that
construction can continue.
The fast-track design of the terminal, using the ship as a
floating storage tank piping LNG directly to the terminal, will
allow the project to start supplying gas to customers while two
large onshore storage tanks are being built.
In the fast-track stage, the terminal will produce an average 5
million cubic meters a day of gas, rising to 6.5Mm3/d once the
storage tanks are finished next year.
The project has contracts to supply state oil and gas company
Empresa Nacional del Petroleo SA, or Enap; power generator Empresa
Nacional de Electricidad SA (EOC), or Endesa; and gas distributor
Metrogas SA (MGS), each of which holds a 20% stake in the terminal
and a 33.3% stake in GNL Chile.
The terminal, about a 90-minute drive from Santiago, will supply
gas to two of Endesa's dual diesel-gas power plants as well as
supplying gas for Enap's refineries and Metrogas' clients.
Other companies could contract to buy gas from the terminal in
the future or they can buy gas, when it is available, from one of
the existing customers.
"We expect the market to respond favorably and see the increased
use of natural gas as soon as commercial operations begin by the
end of August," said Garcia.
The price of LNG is determined by a confidential formula in each
contract, but at around $7 per million British thermal units it is
cheaper, and cleaner, than diesel.
"Having a cheaper fuel source will tend to reduce energy costs
for everybody and bring environmental benefits to the community at
large," said Garcia.
British energy firm BG Group PLC (BG.LN), which has a 40% stake
in the terminal, has a 21-year contract to supply the terminal with
up to 1.7 million metric tons per year of LNG.
When fully operational, the terminal will have a total capacity
of 10Mm3/d, which is equivalent to the maximum amount of gas
central Chile used to import from Argentina through two
cross-border pipelines.
It was Argentina's move to restrict exports through these
pipelines that led Chile's government to charge Enap with
developing the LNG project as part of its strategy to diversify
energy supplies.
-By Julian Dowling, Dow Jones Newswires; 56-2-820-4241;
julian.dowling@dowjones.com
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