Chile's ENAP looks to regional expansion

SANTIAGO (Reuters) - Chile's state oil company ENAP is taking adequate steps to supply the nation's growing energy demand, including building domestic liquid natural gas plants and expanding operations in Peru and in Ecuador.

Chile imports most of the fuel it consumes and has seen natural gas supplies from Argentina interrupted with increasing frequency in recent years amid growing internal demand for the fuel by its Andean neighbor.

Enrique Davila, ENAP's president since 2004, told Reuters that one of the primary tasks given to ENAP by the government was to develop an energy mega-plan to ensure national fuel supplies.

The plan includes the construction of two liquid natural gas (LNG) plants -- a long term solution meant to fill the gap in shipments from Argentina -- that should come on-line in early 2009.

"I think we're taking the necessary measures in time and that they will allow us a more complete level of diversification and autonomy," Davila said on Tuesday at the Reuters Latin American Investment Summit.

Davila said cuts in supplies of Argentine gas were becoming progressively worse, but that the situation was under control.

"The figures are manageable. In 2008 we will have a situation that I can say we're prepared to handle."

INCREASED ACTIVITY IN ECUADOR AND PERU

ENAP, which already has operations in Argentina, Ecuador, Egypt, Iran and Peru, is interested in augmenting its presence in Ecuador and Peru.

Davila said part of ENAP's $2.3 billion investment plan over the next five years will be used to expand production and distribution facilities in Ecuador.

"It's one of our main targets for exploration and production," Davila said, without indicating what kind of growth ENAP expected in Ecuador.

Davila said ENAP is interested in exploiting Ecuador's largest oil field, ITT, but that it was waiting for a go-ahead from state-owned Petroecuador.

Davila also said operations in Peru had exceeded expectations, but that for now it would focus on its distribution business with local partner the Romero Group.

This year ENAP plans to build 10 service stations to supply natural gas to motor vehicles in Lima and to continue purchasing crude oil in Peru.

"We have a very close relationship with (state-owned) Petroperu and we would like to strengthen it even more," Davila added.

Although ENAP no longer has operations in the key Venezuelan market, Davila said it had very close ties with the state oil corporation PDVSA, and that the two were in close communication.

He said ENAP's lack of presence in the Venezuelan market was not linked to political issues.

Chile buys 98 percent of the oil it consumes and 80 percent of its natural gas is from abroad.

In 2007 ENAP plans to invest some $350 million, mostly on projects already under way in Chile and other countries.

(For more on the Reuters Latin American Investment Summit, see ID:nN15302956)