Enap Receives Environmental Approval for LNG Project in Chile

Chile's state oil company Enap has received environmental approval from regulator Corema for its liquefied natural gas (LNG) project in the country's central Region V, Enap said in a statement. Corema approved Enap's environmental impact study (EIS) by a wide margin, the statement said. "This is an important sign for the international and local companies participating in the tender as obtaining [environmental approval] eliminates the issue of environmental uncertainty," the statement said. The project, which was announced in early 2004 by Chile's President Ricardo Lagos, involves the construction of an LNG import terminal and regasification plant as well as the subsequent distribution of the fuel. Enap leads a pool of consumers that have agreed to buy gas from the project including local power generators Endesa, AES Gener and Colbún as well as gas distributor Metrogas. Enap received bids to supply LNG to the proposed regasification plant at the port of Quintero in late August but the winner has not yet been announced. The offtaker pool will buy at least 8 million cubic meters a day (Mm3/d) of gas from the project, which will initially have an output capacity of 9-10Mm3/d. Investment in the terminal's construction and port facilities is estimated at some US$400mn. The project will take about 30 months to build and is scheduled to start operations in 2008-2009. Enap and the government have said the gas will likely cost US$4-5/MBTU even though gas in the US - an alternative market for LNG producers - is currently selling at about US$11-12/MBTU, according to the Henry Hub benchmark gas price. Chile began pursuing alternative energy sources last year as Argentina failed to meet contractually agreed-upon export levels of natural gas as a result of increased domestic demand.

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