Enel Chile secures winter gas from Argentina

Electricity generator and distributor Enel Chile is leveraging neighbor Argentina’s growing natural gas sector this winter, the company’s 1Q23 results call was told.

Enel has secured supply starting in May, when the mercury starts to drop in the Southern Cone. 

Argentine producers Pan American Energy (345,455m3/d), Pampa Energía (1.16Mm3/d), Total Austral (359,091m3/d) and Tecpetrol (531,818m3/d) logged authorization requests this half for firm exports to unit Enel Generación from 1 May to 1 July.

The biggest supplier, Pampa, disclosed a price of US$10.4/MMBTU (million British thermal units) at the point of export, according to documents published by Argentina's federal energy department. 

Argentine supply eases the demand for imported LNG for the power generation sector in Chile.

Argentina is working to build year-round firm exports, chiefly to provide outlets for growing production in the Neuquén basin, home to the Vaca Muerta unconventionals formation, and generate much-needed revenue.

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Enel Chile CFO Giuseppe Turchiarelli said further purchases were being discussed: “Of course, we’re negotiating new Argentine gas supply for the rest of the year. At the moment we can't provide any kind of details.”

Argentine gas production was 130Mm3/d in February, up 2.0% year-on-year, according to a report from the General Mosconi institute energy think tank.

Participants in Argentine production incentives program Plan Gas that meet their supply commitments would be given preferential rights to export natural gas or LNG on a firm basis.

ALSO READ: Argentina greenlights Plan Gas extension, outlines export rules

Argentina does not have export-scale liquefaction facilities, but developers are mulling several projects. The country has export ducts to Chile, Uruguay and Brazil. Chile is Argentina’s biggest offtaker.

ENEL PROJECTS

In terms of power plant investment, Chile’s central and southern zones are blinking brightly on the radar of Enel, the country’s biggest generator by installed capacity.

Enel has a hybrid project, Rihue (120MW wind, 34MW storage) ready to start construction in the Biobío region and is already building La Cabaña (106MW wind, 34MW storage), which will straddle the border between the Biobío and Araucanía regions.

While grid congestion in the central and southern zones is less pronounced than in the country’s north, pressure on existing infrastructure is growing. Interest in projects that include storage systems – which can help mitigate transmission challenges and tap higher evening spot prices – is trending up. 

INSTALLED CAPACITY

Enel Chile’s net installed capacity stood at 8.5GW in 1Q23, with hydroelectricity accounting for 41%, non-conventional renewables 34%, CCGT 17% and oil-gas 7%.

In its strategic plan for 2023-25, capacity is expected to climb to 9.5GW by end-2025, driven by renewables. 

In the plan, capex for renewables development over the period is estimated at US$1.1bn, with solar accounting for 47%, wind 25%, hydropower 14%, battery storage 14% and geothermal 1%. The bulk is scheduled to be deployed in 2023-24.

Overall investment for the period is put at US$1.7bn, with renewables accounting for 71%, grids 18%, thermoelectric 10% and energy transition solutions unit Enel X 1%.

Capex of US$127mn was deployed in 1Q23, down 24% year-on-year, with US$65mn (down 44%) pumped into renewables, about half of this spent on wind projects. Renewables capex allocation is scheduled to climb next quarter. 

BOTTOM LINE, SALES

Enel Chile, the country’s biggest utility by installed capacity and number of clients, posted attributable net income of 140bn pesos (US$174mn) for 1Q23, more than double the 60.3bn pesos posted in 1Q22.

The bottom line was fattened by 31% growth in revenue to 1.18tn pesos, which in turn was driven by a 28.1% expansion in revenue from electricity and foreign gas sales to 1.01tn pesos.