* BG Group and Chile's ENAP, Endesa clash over LNG contract
* Chile energy minister says closely following negotiations
* World No.1 copper producer Chile reeling from power woes
SANTIAGO, Nov 12 Chile is closely following
negotiations between British oil and gas company BG Group Plc
and two of its local clients amid a contract dispute
centered on liquefied natural gas volumes and prices, Energy
Minister Jorge Bunster said on Monday.
BG Group has said production troubles in Egypt could affect
its supplies of LNG to Chilean state oil company ENAP
and energy generator Endesa Chile, who strongly oppose
a potential reduction.
"We're following these negotiations," Bunster told reporters
after a press conference. "We hope the issues can be resolved in
business conversations, so we're following it closely, with
The brewing contract dispute is another energy headache for
miners in world No. 1 copper producer Chile. The Andean country
is reeling from high power prices, as key energy projects suffer
legal setbacks, and droughts and the availability of few local
power sources strain supply.
Chile is seen turning further to LNG and diesel generation
as courts increasingly reject coal-fired thermoelectric plants
and hydropower projects in pristine Patagonia.
President Sebastian Pinera will be in London on Nov. 15 and
16 as part of a week-long European tour. The presidency declined
to comment on whether Pinera would broach the topic during his
VOLUMES, PRICES EYED
ENAP and Endesa Chile have said they are still negotiating
with BG, but will not comment on the volumes or prices being
discussed. A third client, Metrogas, will not be affected by a
ENAP, Endesa and Metrogas each have an equal stake in GNL
Chile, which receives gas via a contract with BG. The contracts
stipulate lower prices as of 2013 if the firms ask for a certain
fixed volume in the long-term, ENAP has said.
The contract was due to evolve next year from being indexed
to Brent crude oil prices to natural gas prices at Henry
Hub, the U.S. benchmark natural gas supply point.
A shale gas boom in the United States has driven down prices
for Henry Hub cash prices -- they reached a 10-year
low of $1.82 per mmBtu in late April -- meaning an indexation
switch would deal a blow to BG.
Industry sources and data seen by Reuters suggest very few,
if any, cargoes from Egypt have ever been sent to Chile.