Chile’s gas exports to rise 8-10 % in 2004 despite restrictions

Nov 08, 2004 01:00 AM

Chile's national energy commission (CNE) expects net gas imports from Argentina to rise 8-10 % in 2004 compared to last year despite the impact of gas export restrictions earlier in the year, CNE director Luis Sanchez Castellon told.
"Despite the crisis, despite the gas supply restrictions we suffered due to the problems in Argentina, Chile will receive more gas in 2004 than in 2003," Sanchez said. This growth reflects not only Chile's demand but also the desire of Argentine gas producers to comply with the contracts that exist between the countries, he added.

Chile has accused Argentina of violating a gas agreement between the two neighbours by favouring domestic supplies over international contracts, but Sanchez was diplomatic regards the controversy and said the CNE is "optimistic" of a resolution to the issue in the short term.
Chilean natural gas-fired power generation accounts for about 37 % of the country's total installed capacity, requiring about 22 mm cmpd of gas imports, all of which come from Argentina. Gas exports from Argentina were cut by up to 50 % in May-June this year to favour domestic consumers, but have "practically" normalized since then, Sanchez said.

"We understand this is a situation that might not be completely normal in 2005 particularly in the winter period when Argentine gas demand peaks," Sanchez said, declining to speculate how much exports might be affected next year.
"It's not possible to make a projection because this depends on a variety of factors including domestic demand [in Argentina], the relative prices of fuels, the level of gas production and of course the level of economic activity in Argentina," he told. "We are convinced that next year we will have fewer supply difficulties than we had this year because things are moving in the direction of normalizing," Sanchez said.

Chile is encouraged by new investment projects in the Austral basin and the trend towards normalizing domestic prices in Argentina, "which will create a better balance between supply and demand and this will favour the ability to meet the contracts with Chile," the official said.
Nevertheless, the shock of Argentina's gas crisis has spurred Chile's government into developing alternative sources of energy to meet growing demand in the coming years and reduce dependence on Argentine gas imports, Sanchez said.

These alternative energy sources include a project being developed by state oil company Enap to import LNG from 2007-2008 and a joint venture between Enap and Italian company Enel to develop geothermal projects.
In the long term, there is "full awareness" in Chile and Argentina of the importance of the benefits associated with energy integration, Sanchez said, adding the "essential" thing is to ensure the integration process in the Southern Cone does not founder as a result of the extraordinary conditions that led to the gas export restrictions.

Source: Business News Americas
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