The US is now Chile's no. 2 natural gas supplier

The US supplied 31% of Chile's natural gas imports in June, a month which saw the arrival of Chile's first-ever cargo of US-produced LNG to the Quintero regasification terminal in Valparaíso region.

The US was second only to Trinidad and Tobago, which provided 52%, according to a report published Monday by Chile's national energy commission CNE.

Chilean national oil company Enap signed a long-term supply deal in 2014 with BG (now Shell) for LNG exported via the Sabine Pass liquefaction terminal in the US state of Louisiana, amid exponential growth of shale gas production in North America.

Sabine Pass operator Cheniere Energy also holds a 50% stake in the Penco-Lirquén offshore LNG regasification project in Chile's Biobío region (VIII), which recently obtained environmental approval and will supply gas to the 640MW El Campesino combined-cycle gas turbine nearby.

In its second-quarter earnings presentation, Cheniere cited 15 LNG-to-power opportunities in varying stages of development throughout Latin America as central to the company's growth strategy.

These include existing markets Chile, Argentina, Brazil, the Dominican Republic, Puerto Rico and Mexico, as well as earlier-stage markets such as Uruguay, Colombia, Jamaica, Costa Rica, Panama, El Salvador, Martinique & Guadeloupe, Curaçao and Aruba.

CHILE OUTLOOK

In addition to El Campesino, which is under development by Chilean firm Biobíogenera, Spain's Gas Natural Fenosa (GNF) is planning the US$400mn, 600MW Tierra Noble CCGT plant, which is also envisioned for Biobío region.

The challenge for Tierra Noble will be securing a long-term power-purchase agreement in Chile's ultra-competitive generation market, which has seen wind and solar projects outbid venerable conventional generators in each of the last two auctions for the supply of power to distributors.

El Campesino won a long-term PPA to supply 3,800GWh/y to distributors in a tender at the end of 2014 for a price of US$110.99/MWh, more than double the US$47.6/MWh average price awarded in Chile's latest tender, which concluded last week.

After obtaining contracts to supply 320MW of wind and solar capacity in the auction, GNF said it will seek to secure bids in one of the subsequent tenders for Tierra Noble.

CNE plans to launch tenders in 2016, 2017 and 2018 for 3,800GWh, 7,200GWh and 8,900GWh of electricity per year, respectively.

While the most recent tender was designed with the sole purpose of obtaining the lowest possible prices, energy minister Máximo Pacheco indicated at BNamericas' 6^th LatAm Power Generation Summit earlier this month that future auctions could be geared exclusively toward specific technologies such as natural gas or hydropower.

Natural gas accounted for 22% of total power generation on Chile's central SIC grid and 13% of output on the northern SING grid in June, according to the CNE report.