GDF Suez official: Mejillones LNG price tied to project cost - Chile
Tuesday, October 14, 2008

The price of LNG entering Chile through a regasification plant being constructed in the northern port of Mejillones will be more tied to the cost of the project than to market fluctuations, GDF Suez strategy manager for Andean countries Darío M. Febré told the BNamericas-IBC Energy Integration Congress in Santiago.
Chile's state copper miner Codelco and multinational energy company GDF Suez each own 50% of the GNL Mejillones JV that is constructing the US$500mn temporary terminal.
The terminal has send-out capacity of 5.5Mm3/d, enough to produce 1.1GW of power, and the JV has already signed contracts with copper miners in the region to supply gas for thermo generation beginning in January 2010.
"The LNG supply has been contracted by the mining clients from the beginning of 2010 to September 2012. There are price agreements and they are not directly tied to market prices but to the investment [in the project]," Febré said. "After 2012, the clients have the right to use the facilities, but at a much lower price."
The final price of LNG imported through the facility, however, will be competitive with diesel-based generation, Febré told BNamericas after his presentation.
GNL Mejillones, meanwhile, expects to decide on whether to build a permanent onshore LNG tank in 6-9 months, BNamericas previously reported.
The consortium had previously said it would decide on the long-term future of the project before the end of the year.
"No decision has been made yet because there is still time to decide," Febré said.

Nathan Crooks
Business News Americas

HidroAysén could save US$495mn/y in reduced energy imports - Chile
Monday, October 13, 2008

The US$3.2bn HidroAysén hydro project being developed in southern Chile's Aysén region could save the country's economy US$495mn/y from reduced fuel imports used by thermo plants, HidroAysén general manager Hernán Salazar told the BNamericas-IBC Energy Integration Congress in Santiago.
"This is a clean, renewable and national project," Salazar said, stating that energy savings directly contribute to GDP growth.
"Chile has only developed 25% of its hydro potential, and countries that have hydro capacity use it," Salazar said. "Hydropower is to Chile what natural gas is to Bolivia."
The 2.75GW project consists of five hydro dams that, pending approval, would be constructed on the Baker and Pascua rivers in the far south of Chile and supply 21% of the total capacity on the country's central SIC grid when the final stage comes online at the end of 2020.
The EIS for the project was submitted in August.
Salazar, meanwhile, said that the company was unfazed by Chile's forestry service Conaf saying that the project was not compatible with existing laws in the country. Conaf is the first of 36 agencies that must submit a report on the EIS.
"We're busy, but not worried," Salazar told journalists after his presentation, adding that the company would wait to receive comments from the other agencies involved before preparing an official response.
Spain's Endesa and Chilean generator Colbún each have 50% stakes in the HidroAysén JV. Environmentalists have protested the project and object to a transmission line that would connect the plants to the SIC, arguing that the works would do irreparable harm to pristine lands in Patagonia.

Nathan Crooks
Business News Americas

Academic takes minister's nuclear plan to task - Brazil
Friday, October 10, 2008

Brazil is unlikely to meet mines and energy minister Edison Lobão's ambitious nuclear power program in the long term, São Paulo university (USP) professor Edmilson dos Santos Moutinho said in a presentation at the BNamericas-IBC Energy Integration Congress in Santiago, Chile.
The plan, which practically entails building one new nuclear plant annually for 50 years, poses technological and human resource problems that Brazil is not equipped to face, he said.
Given the delay in Angra III, Brazil lacks the technical platform to execute a major nuclear program, according to the academic. In addition, the country does not have enough experienced personnel to carry out a nuclear plan of such scope.
Instead, the government needs to establish a clearer energy policy that makes "intelligent" use of the country's natural gas reserves in the Santos basin and the expertise of its neighbors, said Moutinho, who is an associate professor in USP's graduate energy program and a consultant for government agencies, energy companies and NGOs.
The minister said in September he wants Brazil to exceed 60GW of installed capacity from nuclear power in the next 50 years.
The government aims to build four additional nuclear projects after the 1.35GW Angra III plant wraps up: two in the northeast and two in the southeast, he said.
"We currently have a 30-year plan, but we will adjust it. It looks impossible, but don't forget France has 58GW of installed nuclear capacity that was developed in just 30 years," Lobão added."We can do it here in Brazil."
Brazil has roughly 2GW of capacity from Angra I and II. The company has restarted development of Angra III after decades of delays.

Randy Woods
Business News Americas

Official: Regional integration could save US$1.1bn annually - Regional
Thursday, October 9, 2008

Increased power and gas integration could save Latin America nearly US$1.1bn a year, CEO of Chilean generator Endesa Chile, Rafael Mateo, told the BNamericas-IBC Energy Integration Congress in Santiago.
"In theory, energy integration is better than isolated systems," Mateo said. "With power and gas integration throughout the region and a hydro-thermo model that could optimize power flows, we can conclude the total savings would be around US$1.1bn a year."
Countries including Chile, Argentina and Ecuador would see benefits as energy importers from reduced prices.
Other energy exporters including Brazil, Colombia and Panama could see increased revenues from higher power prices.
"Right now, each country is solving its own problems and integration is not really on anyone's agenda," Mateo said.
In order to go forward with any serious integration, meanwhile, countries will have to rebuild trust.
"But I'm an optimist and integration, without a doubt, is the future," Mateo said.

Nathan Crooks
Business News Americas

Minister: Energy investments to reach US$24.5bn through 2012 - Chile
Thursday, October 9, 2008

Investment in Chile's energy sector through 2012 will reach US$24.5bn, nearly 43% of the total US$57.3bn to be invested in the country during the period, energy minister Marcelo Tokman said at the 5th Energy Integration Congress hosted by BNamericas and IBC.
The global financial crisis could bring uncertainty to planned investments in the sector, he said.
"While we are in a period of great fluctuation and uncertainty, the Chilean economy has never been better prepared to confront a situation like this," Tokman said in Santiago.
"We have to learn that we are subject to much more volatility than before," he said, adding Chile had even more of a reason to reduce its dependence on imported fossil fuels.
"We were talking about oil at US$150/b a few months ago and are now seeing prices closer to US$90/b, Tokman said, adding US$90/b should not be seen as the long-term price given recent volatility.
Chile's power sector is heavily dependent on international oil prices. Generators have been burning diesel of late in light of decreased imports of Argentine gas.

Nathan Crooks
Business News Americas

Industry group: Methane discovery may ease natural gas export hurdles - Colombia
Thursday, October 9, 2008

A methane discovery in Colombia may ease regulatory hurdles for producers that want to export natural gas, Colombian oil association president Alejandro Martínez Villegas told BNamericas.
"The government has been worried about the growing natural gas deficit in the country and regulators have been interrupting natural gas export contracts," Martínez said after speaking at the BNamericas-IBC Energy Integration Congress in Santiago, Chile.
"But now with this large methane discovery, this problem will lessen and we'll return to a scenario where these kinds of regulations will not block the export of natural gas," he added.
Coal miner Drummond announced earlier in the month it had discovered methane reserve totaling 2.3Tf3 (65Bm3), according to local press reports.
Several natural gas producers that operate in Colombia have wanted to export to achieve higher prices.
Toronto-based Pacific Rubiales (TSX: PRE), for example, wants to export some gas from its La Creciente field via CNG to Caribbean markets but is awaiting regulatory approval.

Nathan Crooks
Business News Americas

Analyst: Smaller companies should consider clusters - Regional
Wednesday, October 8, 2008

Smaller companies may be in the best position to take advantage of Latin America's growing renewable energy industry by joining forces in clusters, Frost & Sullivan industrial analyst Jorge de Rosa told BNamericas.
The analyst said in a presentation at the BNamericas-IBC 5th Energy Integration Congress in Santiago that smaller companies should be given a greater role in the development of renewable sectors in Chile and Brazil.
"Companies have to look at clustering. Look at Denmark and Germany. These are countries that are dominated by small and mid-sized companies. Different companies have different strengths and weaknesses so the best way is for these companies to create clusters," de Rosa said.
"If you look at wind farms, it's made of many components. So clustering different small and mid-sized companies with different capabilities can help them compete."
ENERGY INTEGRATION
Long-standing debates over national versus regional integration, meanwhile, continue to remain relevant in Latin America, de Rosa said after being asked about Brazil's potential to export more power throughout the region.
"This is a very difficult question and it's a matter of political interest and political will. I have seen some interesting plans to reinforce energy transmission throughout the region. But Brazil still has a vast area that is not connected to the national grid," de Rosa said.
"Should Brazilian funds, for example, be used to increase connections with Argentina or should this money be used to connect with isolated parts of Brazil? But again, depending on where the demand is located, it could be an intelligent option to connect southern Brazil with Argentina," he added.
CUTTING RED TAPE
Governments throughout the region, meanwhile, will continue to play a large role in the development of renewable energy, but more needs to be done to reduce red tape.
"We need clear and stable rules," de Rosa said. "The bureaucratic rules that must be overcome can be tiresome."
Diverse geography will also continue to play a role in the development of renewable power throughout the region. While Argentina, for example, has substantial wind potential in its southern Patagonia, the region is far from the country's demand centers.
"Big cities in Argentina are far to the north of Patagonia and the strong demand is in the cities. So Patagonia may have substantial potential for wind, but how are we going to connect it to the grid? Projects could be used for local demand, but will that justify the investment?" de Rosa asked.

Nathan Crooks
Business News Americas

3TIER to release comparative solar potential map - Regional
Wednesday, October 8, 2008

Renewable energy forecasting and assessment company 3TIER will unveil next week the first solar potential map of the western hemisphere, company official Kristopher McCahon told BNamericas.
The map will allow project developers to compare countries in the region.
"It's the first-ever map of the solar resources in the entire western hemisphere to permit an apples-to-apples comparison of the countries in the region," McCahon said after speaking at the BNamericas-IBC 5th Energy Integration Congress in Santiago. "You'll have the same standard of mapping for each location."
The development of solar resources in Latin America, meanwhile, will depend on what developers want to do with the resource.
"For large commercial establishments that want to sell power into the grid, there will still be some time before solar power becomes fully competitive with other types of energy," McCahon added. "But the competiveness of solar power is increasing against some other renewable resources historically."
Solar power, meanwhile, could be advantageous to off-grid or remote-power users.
"When your opportunity cost is transporting some sort of fossil fuel over a long distance, it becomes much more attractive to use whatever fuel you have at the site, even if it's just reducing the amount of fossil fuels that you are using," McCahon said.
While a very general solar potential map of South America will show a wide band of potential from southern Peru to northern Chile, a more localized map will show Brazil's massive solar power potential, McCahon added.
Brazil has perhaps the greatest potential for both wind and solar power projects in South America, Frost & Sullivan industrial analyst Jorge de Rosa said earlier at the conference.

Nathan Crooks
Business News Americas

Petrobras: LNG demand to hit 33.1Mm3/d in 2012 - Bolivia, Brazil
Wednesday, October 8, 2008

Demand for imported LNG in Brazil will rise to a natural gas equivalent of 33.1Mm3/d in 2012, according to pricing director at federal energy company Petrobras (NYSE: PBR) Jorge Roberto Abraháo Hijjar.
Demand for the fuel will hit a natural gas equivalent of 1.1Mm3/d by the end of the year, he said at the BNamericas-IBC Energy Integration Congress in Santiago, Chile.
Natural gas imports from Bolivia, meanwhile, are expected to remain flat at 30.1Mm3/d for the next five years.
Domestic production of natural gas in Brazil will rise to 70.8Mm3/d in 2012 from the current 32.5Mm3/d.
Both thermo generation and industrial use will account for growth in natural gas demand in Brazil expected to reach 134Mm3/d in 2012.
Natural gas used by thermo generators will rise from 15.7Mm3/d to 48Mm3/d in 2012. Natural gas use by industry, meanwhile, will rise to 42.1Mm3/d from the current 28.8Mm3/d.
FIRST PLANT DELAYED
Brazil's first LNG terminal is expected to start operations at the end of October or November. The terminal in Pecém port is capable of regasifying 7Mm3/d and earlier was due to start receiving shipments this month.
"It has all the approvals, it's just going through conditioning," Hijjar told BNamericas about the terminal after his presentation.
Petrobras already has bought several LNG cargos, although Hijjar could not comment on pricing.
Petrobras has yet to make a decision on whether to build a third LNG terminal. The firm is advancing construction on a second LNG terminal in Rio de Janeiro state.

Nathan Crooks
Business News Americas

Mainstream: Financing available despite global crisis - Regional
Wednesday, October 8, 2008

Nearly every industry is going to find it harder to borrow in the wake of the global financial crisis, but funding is still readily available for new energy projects, Dublin-based Mainstream Renewable Power official Rachel Drury said at the BNamericas-IBC Energy Integration Congress in Santiago.
"The fundamental issue of energy with fossil fuels depleting as demand rises is not going to go away, and we're going to have to do something in light of the financial crisis or not," Drury said.
The newly formed renewable power company has been able to raise US$100mn in the last six months despite difficult market conditions.
"The money is out there. You just need to have a good business plan. Pension funds will go on to look for more security, so we see this as an opportunity," Drury continued.
"With wind power, we can predict what the field cost is going to be. It's an asset, not a piece paper and gives a steady return of 25 years," she added.
"The uncertainly that we need to be sure of what the wind speed is because that's our revenue. And we have the internal expertise to assess wind speed and get financing on that basis."
High oil prices, meanwhile, are making wind parks even more attractive to investors as prices seen in power purchase agreements increase.
"If oil and gas prices stay as high as they have been, that's also to determine the price we get for wind," Drury continued. "And even though the price of oil has dropped recently, it's still quite high compared to what it was three or five years ago."
Mainstream Renewable Power focuses on developing, building and operating wind, solar and ocean current plants by partnering with governments, utility companies, developers and investors. In Latin America, the company focuses on Chile and Brazil.

Nathan Crooks
Business News Americas

Mainstream Renewable Power to target Brazil, Chile - Regional
Wednesday, October 8, 2008

Dublin-based Mainstream Renewable Power plans to focus on opportunities in Chile and Brazil in addition to other markets in North America, Australia and Europe, company representative Rachel Drury said at the 5th Energy Integration Congress hosted by BNamericas and IBC in Santiago.
Founded in early 2008, the company will focus initially on wind farm development and intends to develop greenfield projects from the ground with local partners before selling the project to pension funds.
Mainstream will continue to operate and maintain the projects after the sale.
"We'll have three streams of revenue coming into the company including funds from the sale of the asset, maintenance and operations fees, and a performance fee," Drury said.
"We see the boom [in renewable energy] about to happen in these markets. We are confident the potential is there and we're going to get in ahead of the curve before everyone comes and it gets too competitive," Drury added.
Mainstream has an initial agreement for a new wind farm in Chile with local Chilean firm Andes Energy and the project could be delivered by 2010, Drury said. The two companies could develop an initial pipeline of 240MW, according to the company website.
"Working in partnerships has proved in the past to be quite successful for us and we see it as the key factor in getting our planning permissions and our projects built," Drury continued.
Mainstream, meanwhile, already has relationships with turbine providers including GE, Siemens and Mitsubishi.
"The banks don't want you to be delayed by 12 or 18 months and a key factor in getting financing is the turbine supply contracts," Drury said. "Developers are having to wait for 18 or 24 months to get turbines, but we are fortunate we have good agreements in place with our providers to ensure the delivery of turbines."
Mainstream intends to sign initial power sale agreements for a certain amount of each project's power but also likes to take on a bit of risk and sell part of the power on spot markets when prices are increasing.
The company has not ruled out acquiring projects already under development, although it prefers to start from the ground up.
"Wind energy is proven and it will be driven by emissions reduction targets, energy security, growing power demand and economic development," Drury added.
The company is mapping Chile's wind potential to look for more projects and will eventually look at small hydro and solar power projects.
"Solar power is feasible with high oil prices," Drury said. "We'll start looking at the market and do initial studies, but we'll hold off for 5-10 years. But with potential government support or if power prices remain high, then it could be feasible."
Mainstream raised 72mn euros (US$98mn) earlier in the year from Barclay's Capital for a 14.6% stake in the company. Mainstream has offices in Berlin, Chicago, Dublin, London, Santiago, Sydney and Toronto.

Nathan Crooks
Business News Americas

Pacific Hydro to close Chacayes financing in November - Chile
Wednesday, October 8, 2008

Australian renewable energy company Pacific Hydro's Chilean subsidiary expects to close financing for its 111MW Chacayes run-of-the-river hydro project in November.
The company would begin construction shortly thereafter, Pacific Hydro development manager for Latin America Luis Arqueros said at the BNamericas-IBC Energy Integration Congress in Santiago
The company was set to lay the first stone for the project at an October 8 ceremony in region VI.
The project should take 32 months to construct and will add nearly 557GWh/y to Chile's central SIC grid.
Chacayes is the first of five hydro plants being developed as part of the 555MW Alto Cachapoal project.
Alto Cachapoal also will include 282MW from Nido de Aguila and Las Leñas, 78MW from Las Maravillas and 89MW from the Coya II project.

Nathan Crooks
Business News Americas

Pacific Hydro to invest US$1.5bn in Chile, Brazil in next 5 years - Regional
Wednesday, October 8, 2008

Australian renewable energy company Pacific Hydro will invest US$1.5bn in Brazil and Chile in the next five years, company development manager for Latin America, Luis Arqueros, told the BNamericas-IBC Energy Integration Congress in Santiago.
The company is developing run-of-the-river hydro projects and wind farms in the two countries and is also looking at opportunities in other countries in Latin America.
Besides the company's hydro projects in Chile, the company aims to install 300MW of wind power capacity in Chile's central SIC and northern SING grids from 2011-13.
Pacific Hydro has signed an MOU with a mining client to develop 100MW of wind capacity and is evaluating four main zones in the country for future wind projects.
Pacific Hydro also expects to add another 300MW of wind capacity in Brazil from 2009-10.
The company already has 10MW of wind capacity operating in Brazil and expects to begin operations at another wind farm in the country before the end of the year.

Nathan Crooks
Business News Americas

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