Chilean NG Industry IGU LNG Committee Viña del Mar

Transcription

1 Chilean NG Industry IGU LNG Committee Viña del Mar 21st March 2018

2 About us Natural Gas Association Chile (AGN) We are a trade association that was formed in 2002, to foster the development of the natural gas industry in Chile, promote the use of this energy resource in our country and be the link between the private sectorandthe authorities. Today the Association represents 10 companies dedicated to the importation, storage and regasification of LNG, and the transportation, marketing and distribution of natural gas. AGN is a member of the IGU, representing Chile as a Charter Member, since

3 Chile General Description Size Population: 17,91 million GDP 2016: US$247 billion or US$ 23,193 per capita (PPP) Administrative Division Chile is a unitary state. It is divided into 4 main regions: Northern, Central, Southern and Magallanes. These regions are further divided into political subdivisions or regions that are numbered from I to XV, plus the Metropolitan Region. Economic Growth Average annual growth between : 3,01% Trade Openness 20 th most free economy (Economic Freedom Index 2018) FTAs in force 2017 with: USA, EU, China, Japan, Korea, Canada, Mexico, Central America, EFTA, Australia, Peru, Colombia, Turkey, Malaysia, Vietnam, Thailand, Hong Kong and the Pacific Alliance Exports 28% and imports 28% of GDP (2016) Stability/Low Risk S&P Classification: AA- long term local currency, A+ foreign currency (Jul. 2017) Transparency (2017) : Country ranking 26/180 Energy Dependency Lack of domestic reserves of petroleum and gas causes Chile to be highly dependent on foreign sources of energy.

4 A brief history of the Chilean NG Industry Development of national resources (Magallanes) Argentine NG Argenti ne NG Crisis Arrival of LNG ENAP initiates distribution in Magallanes Chile and Argentina signed a Treaty to allow Gas Integration between both markets Chile started to import NG from Argentina Argentina started to reduce NG supplies Inauguration of the GNL Quintero terminal Inauguration of the GNL Mejillones terminal Energy Policy 2050

5 Infrastructure and Key Data (2016) NG production: Net import: Share of NG: LNG terminals: - GNL Mejillones - GNL Quintero Principal binational pipelines: - NorAndino - GasAtacama - GasAndes - Gasoductos del Pacífico 1.2 bcm (supplies an solated network in the Magallanes Region) * 4.0 bcm 12% of Total Primary Energy Supply and 16% of electricity generation According to a 2016 study by the US Geological Survey, the Magallanes Basin has 235 bcm of tight-gas potential.

6 Main characteristics of the Chilean Gas Market The main stakeholder of the upstream industry in Chile is the state-owned ENAP, which is responsible for the exploration and exploitation of hydrocarbons, directly orthrough special contracts with private players (CEOPs). Chile s gas reserves are located in the Magallanes Basin in the southernmost part of the country. These reserves exclusively supply industries and the distribution gas company that operates in the Magallanes Region. Both the great distance and the small size of the reserves imply that transportation to the more populated central regions of the country is not economically viable so far. Gas supply by source, Source: IEA, 2017

7 Main characteristics of the Chilean Gas Market (2) Most of the NG consumed in Chile between 1997 and 2009 was importedfrom Argentina through bi-national pipelines. After the 2004 energy crisis in Argentina, gas exports from that country to Chile were rapidly reduced. As a consequence, the gas demand shrunk by two-thirds from 2004 to Following the crisis, a group of public and private Chilean companies worked together to build LNG terminals to avoid dependence on Argentina. GNL Quintero was built in the Valparaiso Region and GNL Mejillones in the Antofagasta Region. Plans exits to expand both terminals.

8 Chile in the Global LNG Market LNG has mostly been imported from Trinidad and Tobago (92% of total imported natural gas in 2015). However, following the development of US Gulf Coast LNG exports, import sources became more diversified in 2016: Trinidad and Tobago (72%), United States (East Coast) (17%), France (4%), Norway (3%), Qatar (2%), Equatorial Guinea (2%) Flow of LNG to Chile LNG Production LNG Demand LNG Production and Demand

9 GNL Mejillones General Description of the Project GNL Mejillones S.A. is the terminal that receives and re-gasifies LNG in the Mejillones Bay and supplies NG to northern Chile. It consists of a total investment of approximately US$700 million. Its business partners are Engie Chile S.A. (63%) andcodelco (37%). Business Structure ofthe Project The Mejillones terminal operates under an open system in which any interested party can contract regasification capacity, declaring with due notice the timeframe they will need to use the terminal. In this way, the company can prepare its Annual Delivery Program. Before the onshore storage tank was installed, the terminal used the BW GDF SUEZ BRUSSELS as a floating storage unit. At that time, a closed or semi-closed model was used, in which only four companies had access to the terminal.

10 GNL Quintero General Description of the Project The GNL Quintero Terminal (GNLQ) is the largest installation in Chile in the field of natural gas. GNLQ is the terminal for receiving, storing and re-gasifying of LNG which operates in Quintero Bay and supplies NG to the central zone of Chile. With a nameplate capacity of 3,75 mtpa and 310,000 m3 net storage capacity, it supplies 5 CCGTs (18,4% of the grid), 2 NG distribution companies, 2 oil refineries, industries and transport. Distributing LNG by truck can supply demand up to Km from the Terminal. It was the first land-based terminal constructed in the southern hemisphere. It was inaugurated in October 2009, required an investment of US$ 1,066 million, and its design, construction and operation meet the highest quality, safety and environmental standards.

11 Gas Consumption NG consumption has fluctuated widely over the past decade because of significant changes in price (Argentinian NG vs. LNG) and supply issues. In the north of Chile, LNG has not been able to compete with coal in power generation as well as cheaper ArgentinianNG did. The south of Chile faces supply issues. Currently, they receive a limited amount of LNG by truck ( m3/day), less than its potential demand. Gasoducto del Pacifico is not receiving any gas from Argentina. The central region is the only area where NG has increased. its consumption, and it now concentrates nearly 85% of the Chilean NG/LNG imports.

12 Gas Consumption (2) In 2016 Power generation accounted for over half of the total natural gas consumption. Industry was the second-largest consumer in 2015, at 24.4% of total gas demand (1.1 Mtoe). The only sectors in which gas consumption increased during the last 10 years were the residential and commercial sectors (up by 38% and 63% respectively). Both more than doubled their share of total gas consumption between 2005 and ,000 8,000 6,000 4,000 2,000 0,000 Natural gas consumption by sector, Heat and Power Generation Other Energy Industry Residential Commercial Source: IEA, 2017

13 Future Regional Energy Integration Since 2016, Chile has also exported and imported natural gas to and from Argentina. Argentina's gas production has become insufficient in the past few years. As a result, the country has had to resort to LNG and pipeline imports to complement its supply and to replace diesel for part of its electricity generation. Chile s and Argentina s state-owned production companies (ENAP and ENARSA) have agreed to supply natural gas on the basis of winterseason contracts, and swap exchanges between Chile and Argentina have alreadystarted. In practice, ENAP sources supply from LNG imports (from the two LNG terminals) and uses reverse flow in both cross-border pipelines to ship LNG to Argentina. In December 2017, Chile and Argentina signed a new agreement that will permit energy interchange (as swaps) between both countries.

14 Carlos Cortes-Simon Executive Director AGN - Natural Gas Association - Chile ccortes@agnchile.cl 21st March 2018

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