GNL Chile, BG Ink Deal, Negotiate EPC Contract with CBI

GNL Chile, which is coordinating the offtaker pool of the planned US$350mn LNG re-gasification terminal in Quintero in central Chile, has signed a definitive agreement with UK gas company BG Group (NYSE: BG) for plant development, GNL Chile said in a statement.

The agreement allows for the companies to establish the plant's business structure, identify activities to be carried out and define the terms of LNG supply, storage and re-gasification.

Furthermore, the deal includes the basic terms for the sales contracts for gas as well as the development of an EPC contract.

GNL Chile and BG are negotiating the turnkey contract with US engineering firm Chicago Bridge & Iron (NYSE: CBI), the statement said.

The contract will include the option to fast track partial operations to begin in late 2008 preceding the full 2009 start-up.

GNL Chile will conclude preliminary developments in Quintero as well as negotiations for final commercial agreements in the next few months, the statement said.

The offtaker pool - made up of local power generator Endesa Chile, local distributor Metrogas and state oil company Enap - has promised to purchase at least 6Mm3/d of LNG from the plant. Enap will supply local distributors Enagas and GasValpo.

Enap signed a letter of intent with BG in February to negotiate contracts for the plant's construction and LNG supply.

LNG would give Chile the greater energy security and autonomy necessary since Argentina gas supply cuts started in 2004.

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