Endesa, Metrogas to Buy Gas from Enap LNG Project

Chilean generator Endesa Chile (NYSE: EOC) and natural gas distributor Metrogas have signed an agreement with state oil company Enap to be offtakers for the latter's proposed liquefied natural gas (LNG) re-gasification project, Enap said in a statement.

Enap plans to build an LNG re-gasification terminal at the port of Quintero in central Chile's Region V to reduce dependence on Argentine gas imports.

Gas imports have been drastically reduced in the last few months as Argentina's government has ordered gas producers to re-direct natural gas away from exports to meet domestic demand in that country.

The agreement with Endesa and Metrogas is "essential" to the implementation of the LNG project because it guarantees offtakers for the gas, the statement said.

The agreement establishes firm gas purchase commitments, but the statement did not say how much gas Endesa and Metrogas will buy from the plant.

"This agreement with Endesa and Metrogas allows us to be optimistic about the realization of this project because it shows the interest of large energy companies in having LNG, which gives energy autonomy to the country," Enap CEO Enrique Dávila said in the statement.

Dávila said in mid-January that environmental studies and technical specification studies for the terminal would begin in 2Q05 and an international tender for construction of the terminal would be launched in April 2005. Offers will be received in May-June and Enap will award the contract in July-September. Operations are set for 2008. It will be the first terminal of its kind in South America.

Metrogas is based in Santiago and is expanding south to Region VI. The company has approximately 300,000 customers and a total of 4,273km of pipelines. Endesa is owned by local holding company Enersis (NYSE: ENI), in turn owned by Spain's Endesa (NYSE: ELE).

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