How Chile’s Enap plans to spend US$3.5bn in 2023-27

Chile’s state-owned oil company Enap is planning to spend US$3.5bn through 2027, funds chiefly targeting hydrocarbons but also green hydrogen. 

Enap will require the expertise and support of private players, particularly specialist foreign firms, suppliers were told during a strategy presentation Thursday.

The company has earmarked US$988mn for refinery and midstream maintenance and overhaul work, while US$1.41bn targets upstream outlay and US$109mn development of new fuels, refinery conversion and associated logistics work. Both the company board and shareholders have greenlit the plan.

Enap’s corporate manager for development and strategic planning, Nicolás Correa, said: “We’re the sole player in this industry in the country; therefore the needs we have in terms of best practices, trends, technology – at the end of the day, new ways of doing things – only comes from outside the country.”

This was echoed by Edmundo Piraino, Enap’s refinery project development manager. Piraino said working with the private sector was vital to boost in-house knowledge and incorporate new technology into facilities. 

Chile’s only refiner, Enap has three plants with combined crude processing capacity of 224,000b/d. The company also operates in the hydrocarbons transport and storage segments, with upstream assets – along with supporting transport and processing infrastructure – in Magallanes region. 

In terms of refinery work under the 2023-27 plan, Piraino said over 450 projects were envisioned in spheres including decarbonization, supply and facilities security, water management and emissions control. Demand for gasoline is growing, providers were told. Enap production covers 95% of domestic demand for the fuel.

In terms of supplier relations, Enap is planning a series of workshops across the country, including in Magallanes next quarter. 

Enap saw net income quadruple to US$575mn in 2022 as sales climbed to US$12.3bn from US$7.66bn in 2021, mainly driven by a 40% increase in price of ICE Brent. Total financial debt stood at US$4.45bn in December,

OPERATIONAL INTEGRITY: US$988MN

Enap’s plan in this area includes refinery, tank, pipeline and maritime terminal maintenance work as well as renovation of critical equipment. 

In terms of storage and transport, Enap operates eight storage plants, five maritime terminals and seven loading yards. The company also has 10 ships for cabotage operations and transports refined products via two ducts. Some surplus production is exported by sea. Enap also has some unused pipelines and offshore wells.  

ENAP SIPETROL: US$826MN

Unit Enap Sipetrol plans to continue drilling work at assets in Ecuador and Egypt, where 72 and 19 wells are planned, respectively. In Argentina, Enap plans secondary and tertiary recovery projects.

Correa (pictured) indicated Enap may expand its international footprint. Funds, he said, were earmarked “for new alliances to produce, hopefully in additional countries.”

In Argentina, where Enap partners with state-owned YPF, the company produces around 3,100b/d oil and 1.24Mm3/d (million cubic meters per day) gas. In Ecuador, output is 24,800b/d oil, while in Egypt production, in partnership with Kuwait Energy, is 5,600b/d oil.

ENAP MAGALLANES: US$580MN

Outlay planned for domestic upstream work is targeted at boosting production and incorporating new technology.

In Chile, Enap produces hydrocarbons, chiefly gas from unconventional resources, in Magallanes. Unconventional gas output from blocks Dorado Riquelme and Arenal, which came online around 2013, has almost reverted a decline in conventional production. 

Under the spending plan, the bulk is targeted at gas production.

Enap has assigned US$140mn to expand production at Dorado Riquelme, home to the Cahuil play, and US$342mn for Arenal. 

Exploration work involving US$92mn targets the Manzano block and officials are considering an unconventional oil exploration project, possibly with a partner.

Enap recently submitted for environmental review a pair of gas pipelines.   

Enap Magallanes chief Rodrigo Bustamante said the main challenge was reducing production costs along the value chain, which could be obtained via trimming development and production outlay, achieving efficiency of scale via higher output or with innovation. Bustamante said a potential offtaker to absorb additional output was local methanol firm Methanex. 

Magallanes operations produce 3.4Mm3/d gas and 2,020b/d of oil and condensates.

In Chile, the company also partners with private sector upstream firms under so-called CEOP contracts.

Chile imports some gas and oil from Argentina via pipeline, the bulk from elsewhere via ship.

ENVIRONMENTAL PLAN: US$476MN

Planned investment centers on emissions and odor-reduction work as well as water management and other areas.

SUPPLY CHAIN LOGISTICS: US$213MN

Outlay is earmarked for boosting oil terminal and storage capacity, suppliers were told.

Officials have assigned US$144mn for new crude and refined products tanks as well as the overhaul of existing assets. Among other plans, US$35mn is targeted at studies for a new jetty at its complex in Valparaíso region and for dredging, and US$9mn for refined products pipeline capacity expansion. 

"There is much need for storage," Correa said.

OPTIMIZATION: US$206MN

Investment focuses on energy efficiency, chiefly via incorporation of new technology at refineries, and an easing of production bottlenecks.

SAFETY: US$155MN

Investment encompasses the areas of fire safety, leaks and access and monitoring.

NEW BUSINESSES: US$109MN

Investment is geared to green fuel-production pilots, associated infrastructure and digital transformation. 

Specific spending areas include conceptual and basic engineering studies. 

Enap green hydrogen demonstration plants are also planned for company refineries, with first output scheduled for 2025 in Magallanes. In the windswept region, a 1-2MW plant is due to be built at the Gregorio refinery, officials have said previously. The plant would use Enap's local wind power generation assets. 

Correa said that given current uncertainty over how the sector will develop in terms of new fuels produced, the company wanted to evaluate various technologies with the private sector. 

Indeed, he outlined four chief potential product areas: sustainable aviation fuels, green hydrogen for blending and development of applications, blue hydrogen and blue ammonia. Around 90% of hydrogen produced in Chile is used by Enap refineries. 

In parallel, Enap is aiming to leverage and expand infrastructure to help nurture the segment in the region. “We’ve got quite an ambitious plan for how we’re going to ride the energy transition wave,” Correa said. “It’s Enap infrastructure that, in the future, will also mobilize, at the end of the day, new fuels.”

As part of green hydrogen work and under a strategic alliance, a logistics project at Magallanes region maritime terminal Laredo was announced this year and an associated construction and operation tender is pending.

Magallanes is already home to HIF Global's pioneering Haru Oni demonstration plant, which Enap is involved in as logistics partner. Haru Oni harnesses the power of the wind to make green hydrogen that, in turn, is used to make synthetic gasoline. Officials plan to scale up the project to eventually start large-scale exports, likely to Europe.

Overall, companies are mulling 30GW-plus of generation capacity in Magallanes to power complexes that produce green hydrogen and derivatives, chiefly
 e-methanol and green ammonia.

Enap plans include evaluating the offshore wind and solar potential of the region.

Overall, around US$155bn in green hydrogen investment is projected for Chile in 2025-30, state development agency Corfo said at a press conference this week. Some US$45bn targets Magallanes, the balance northern region Antofagasta, where projects would chiefly tap its world-class solar resources. 

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