MercoPress. South Atlantic News Agency

Gas in Chilean Tierra del Fuego, but in commercial volume?

Chile's government oil company ENAP will announce next April 17 the results of the natural gas exploration survey and drilling in Tierra del Fuego.

ENAP's CEO Enrique Davila was summoned this week to the Chilean Senate Mining and Energy Committee which is scheduled to visit Lake Mercedes in Tierra del Fuego where the natural gas exploratory operation in taking place.

"In Lake Mercedes we are drilling, and reaching our objective. Let's hope we find gas in commercial and exploitable volumes", said Mr. Davila in Santiago.

If the drilling is successful, "obviously Magallanes Region will be the first to benefit and if reserves are sufficient we can think of other regions", he added.

"This could turn out to be the great news we are all expecting if gas is found in Lake Mercedes", said Senator Jaime Orpis president of the Mining and Energy Committee.

ENAP has been aggressively exploring for natural gas in southern Chile since late 2005 in an effort to diversify supplies which so far are concentrated in Argentina, a country which has been privileging its own domestic market in spite of export contracts.

The existence of abundant gas reserves in Magallanes region would be particularly beneficial for Methanex, the world's largest methanol producer which has three of its main plants next to Punta Arenas.

These are supplied with natural gas from Argentina but have in previous winters faced severe production cuts.

To reduce its dependency on Argentina, Chile last year called international bidders for the supply of a liquid gas re-gasification plant.

British Gas has been awarded the project which is estimated will demand an investment of over 350 million US dollars and should be operational by 2008.