Utility Suez (NYSE:SZEZY) said its energy division, in conjunction with copper producer Codelco, is to construct a liquefied natural gas (LNG) regasification terminal in Mejillones, in the region of Antofagasta, Northern Chile.
The group said investment in the project, to be owned by newly created company GNL Mejillones SA -- 50 per cent owned by each of Suez and Codelco -- will amount to $500m.
In a first phase between 2009-2012, the project will see the construction of a jetty and an on-shore LNG regasification terminal
with a send-out capacity of 5.5 mln cubic metres of gas, sufficient to produce 1,100 megawatts (MW) of electricity.
An LNG vessel, with a storage capacity of approximately 135,000 cubic metres, will be permanently moored and serve as a floating storage.
In a second phase, an on-shore storage tank of 160,000 cubic metres will be built. During the coming months, the feasibility studies for this tank, which will convert the project into a long-term solution, will be initiated. The construction of this tank will take three years.
The terminal will be built by the Spanish engineering company Tecnicas Reunidas and the jetty by the Chilean company Belfi. Tractebel Engineering is in charge of the basic design, coordination and supervision of the construction.
A unit of Suez's energy unit, Andino, will be responsible for the operation and maintenance of the terminal.
GNL Mejillones is making progress in terms of environmental permits and other authorizations necessary to build and operate the plant, Suez said.
It added that GNL Mejillones has signed contracts for the sale of natural gas (equivalent to 450 electric MW baseload) from the end of 2009 onwards, with four main companies: Codelco, BHPB, Collahuasi and El Abra.
Suez will supply the LNG during the first three years of the terminal's operation.
Suez said the project helps to guarantee short and long-term energy supply security in the north of Chile, which is still affected by the gas supply restrictions from Argentina. [Source: Thomson Financial]