Chile Enap Reaches Agreement with BG Over Gas Supply Contract

By Graciela Ibanez

Chile's state oil and gas company, Empresa Nacional del Petroleo SA, or Enap, and BG Group PLC (BG.LN) after several months at loggerheads reached an agreement over prices and volumes of a liquefied natural gas contract.

After Henry Hub prices went sharply lower, BG sought to renegotiate the conditions on long-term contracts signed in 2007 with Enap, power generator Empresa Nacional de Electricidad SA (EOC, ENDESA.SN) and Chile's largest gas distributor, Metrogas, to supply them with LNG.

BG will supply "bigger volumes of LNG at competitive prices," Enap said in a late Friday statement without providing price details. The new contracts will start in 2013 and will last in 2030.

BG already negotiated its contract with Metrogas, which supplies gas to some 450,000 residential and industrial clients in Santiago, but hasn't reached a deal yet with Endesa.

BG, Enap, Endesa and Metrogas are all partners in the GNL Quintero SA LNG regasification terminal in central Chile.

BG, however, is in the process of divesting its Chilean assets, as the company recently sold a 20% stake in the regasification terminal to Spanish energy company Enagas SA (ENGGY, ENG.MC). It plans to sell its remaining 20% stake in the terminal to Enagas by the end of the year.

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