Summit News

Chile sees no '09 energy rationing

SANTIAGO (Reuters) - Despite scant rains, Chile should not face any energy supply disruptions or rationing in 2009, thanks to new power projects and lower demand, Energy Minister Marcelo Tokman said on Monday.

“All our analysis shows that even in very unfavorable conditions, we should not have supply problems,” Tokman said.

Speaking at the Reuters Latin American Investment Summit in Santiago, Tokman said there were no signs that the global financial crisis would affect the $22 billion worth of private sector energy investment planned for coming years.

“So far we have not received any signals about any problems financing these projects,” Tokman said, adding the fact they were generally long-term in nature meant short-term price and demand fluctuations did not affect them.

Chile was buffeted by an energy squeeze last year after a drought hit hydroelectric output, Argentina restricted natural gas exports and the cost of oil and diesel imports soared, raising the specter of energy rationing.

The government then asked the public to conserve energy and took a series of measures to avoid blackouts, like lowering voltage, reducing electricity consumption in public buildings and relaxing rules on water use for generators.

Subsequent Southern Hemisphere winter rains, electricity generation projects coming on-line and improved hydroelectric generation due to higher reservoir levels then eased Chile’s energy shortage.

Tokman said the government had reduced its forecast for 2009 energy demand growth to 2 percent from 4 percent and said that hydroelectric reservoir water levels were 2.6 percent below levels seen at this time last year, and 46.8 percent below levels in past years that saw normal rains.

Tokman said Chile would continue to buy available natural gas from neighboring Argentina, which has restricted supplies to cope with its own energy squeeze, despite a new LNG plant at the port of Quinteros in central Chile, which will come on-line in June.

Argentina has choked gas exports to Chile to under 10 percent of the 22 million cubic meters a day it had agreed to send to its neighbor.

“If it is now in a position to send us natural gas at a competitive price relative to LNG, then we must take advantage of all the gas they can send us,” Tokman said.

“We don’t expect the arrival of LNG to mean an interruption to gas supplies from Argentina,” he added.

Tokman said the Quinteros plant would receive its first shipment from Trinidad and Tobago in June, and would produce 5.5 million cubic meters of gas a day. He said output would double next year.

Another LNG plant at the northern port of Mejillones, which will feed the energy-hungry mining sector and giant state copper producer Codelco, will receive its first shipment in December, Tokman said.

He said Chile was also diversifying its energy matrix, with new coal-fired plants coming on-line as well as renewable energy projects in the pipeline, including wind farms and solar power.

(For summit blog:

With reporting by Patricia Velez and Simon Gardner