MercoPress. South Atlantic News Agency

Chile's expands project to cut Argentine gas dependence

Chile could be one step closer to securing its energy supply if a new 800 million US dollars liquid natural gas (LNG) plant receives government approval. The Quintero plant (Region V) was initially designed with a capacity for 5.7 million cubic meter NLG, but has now been expanded to a 10 million cubic meters.

Freeing Chile from dependence on Argentine gas is a central aim of the project. The Quintero plant could be expanded further and contain up to 20 million cubic m of LNG â€" equalling gas supplied by Argentina. Argentina began cutting gas supplies to Chile in April 2004 due increased domestic demand. Analysts anticipate more cuts in Argentine supplies this winter. The new gas plant â€" set to open in early 2009 â€" will be the first of its kind in Latin America and one of the biggest in the world. It includes a shipping dock strong enough to withstand a tsunami and capable of receiving the world's largest ocean liners. The project also includes construction of 500 kilometres of pipeline, joining the GasAndes and Pacífico pipeline networks and supplying LNG to central and southern Chile. Chile produce Latin America's most expensive electricityA study by the Argentine consulting group Montamat and Associates shows that Chile's electricity production is the most expensive in Latin America. Producing one megawatt of power in the country costs US$67.3 per hour, whereas in Argentina this figure is only of US$16.4 per hour. Until 2004, Chilean electricity production cost US$20 per megawatt, and was as competitive as that of countries such as Uruguay and Peru. But this scenario changed drastically in 2004 in the wake of the Argentine gas supply crisis, which affected Chile's gas-based electricity matrix and forced it to adopt diesel-based power production. María Isabel González, the former executive Chile's National Energy Committee, said that resort to diesel fuel meant production costs rose to US$200 per megawatt. "This is why Chile has the highest energy production costs," she said. Daniel Montamat, president of Montamat and Associates, says Chile's situation is caused by several factors. "This happens because Chile is forced to import more expensive combustibles (such as coal and diesel) and also because electric prices are not subsidized in the country," he said. Still, the country's higher power production costs do not necessarily translate into more expensive bills. When compared with other Latin American electricity suppliers in the area, Santiago's Chilectra has cheaper prices than Edemet in Panama, Epec in Argentina, and Egsa in Guatemala. According to González, this is because Chilectra serves a very large number of consumers in a very compact area. The Santiago Times