MercoPress. South Atlantic News Agency

ENAP claims abundant natural gas in Tierra del Fuego

Chile's government owned oil corporation ENAP will be investing 40 million US dollars in the exploitation of a natural gas and petroleum deposit in Magallanes Region announced in Santiago the company's CEO Enrique Davila.

"We're currently quantifying the existent reserves in the Lago Mercedes basin, and by the end of the year we should have a first estimate", said Mr. Davila pointing out that the project contemplates in a first stage supplying the extreme south of Chile and later, depending on the abundance of the resource, the rest of the country.

"The discovery of gas and oil in Magallanes is great news for Chile because it will significantly contribute to our increasing energy autonomy" added Davila.

Last April, ENAP announced it had discovered several traces oil and gas at depths ranging from 3.700 to 4.300 meters following explorations that begun in 2005 in the Lago Mercedes 2 zone. Lago Mercedes is located in the heart of Tierra del Fuego 116 kilometres to the southeast of Porvenir.

Davila said that the presence of continuous flows of gas and petroleum was determined "after carrying out production tests at two of the three fields containing hydrocarbons in the zone". Once these positive results were assessed, ENAP immediately decided to start drilling the Lago Mercedes 3 well, which is to be located about four kilometers from the Lago Mercedes 2.

"In Magallanes so far we have invested 20 million US dollars but are contemplating another 40 million US dollars, and we are also looking at 2007. It's a historic evince since they are some of the largest investments the company has undertaken concentrated in time and in a specific area".

Chile currently imports some 22 million cubic meters of natural gas per day from Argentina, but for the past two years has suffered regular and increasing supply cuts because the Kirchner administration privileges domestic demand over exports. Since then Chile has been doubling efforts, and investments, to ensure a sustained and reliable supply of energy.

Because Chile imports over 90% of its oil consumption, plus the Argentine dependency in natural gas, (closely linked to electricity generation), the country has an uncertain energy situation in the short and mid term, particularly in the north where the big copper mines consumers are located.

Towards the end of 2005 the British Gas Group won a bid to build a natural gas re-gasification plant in the north of the country which will demand over 350 million US dollars and should be operational by late 2008, thus freeing the country from the Argentine dependency.

Enap's drillings in Magallanes started last September and a natural gas pipeline from Lake Mercedes to the existent network is currently under construction.

"It's fifty kilometres long and will cost in the range of 50 million US dollars but should give a big boost to Chile's efforts in overcoming its current energy situation", emphasized Davila.