OIL & GAS
Focus on Chile
June 2019
The Chilean government recently announced that it would shut down all of its 28 coal-fired power plants by 2040 in an effort to become fully carbon-neutral by 2050. Eight of these plants will be closing over the next five years according to the country’s president. These plants generate 20% of the country’s power, or 23,000MW.

Thermal coal accounts for 40% of the Chilean energy mix, with the country relying largely on imports to sustain its energy demand. The highly-polluted norther city of Tocopilla will see four-coal fired plants close by 2024, reducing annual carbon dioxide emissions from 30Mt to 4Mt.

Chile’s total energy supply relies mostly on fossil fuels such as thermal coal, oil and gas. The country’s demand for natural gas has gradually increased over the last decade as the country is phasing out thermal coal in favour of natural gas, and on a smaller scale, renewables. Gas-fired power plants release about 40% less carbon dioxide into the atmosphere compares to their coal-fired alternatives.

 

 

The South-American country, which will host this year’s UN climate conference, has increased its share of renewables in the energy mix to 20.8% in 2018 according to the Ministry of Energy. 92% of the country’s 715MW added electricity generation last year came from renewables, mostly solar (59%) and wind (32%).

Argentina announced back in March, after its Energy Secretary met with Chile’s President, that it would resume commercial natural gas exports to Chile after a 12-year interlude through authorized oil companies state-controlled YPF and Total. YPF will is limited to a maximum of 500,000 cubic meters per day, while French oil and gas company Total is allowed to send a maximum of 1.5m cubic metres per day over an initial period of eight months, according to the country’s Energy Secretariat. Representatives of YPF and Total have not made comments yet regarding this new export regime. These natural gas exports will cover approximately 12% of Chile’s forecasted demand for 2019.

Argentina, which holds some of the world’s largest shale gas reserves, was once a supplier of natural gas to Chile, but the country stopped exporting gas in the mid-2000s after it feared its own supplies were too low to meet the demand of its own people—triggering a diplomatic crisis between the two South American countries.

 

 

However, in October last year Argentina resumed natural gas exports to Chile; Argentinian Energy Secretary said in a statement that “Increasing the volumes exported to Chile is the first step. Our great challenge is to continue increasing production to supply the domestic market and be able to export gas all through the year. Natural gas production in Argentina is starting to take off again, increasing 7% annually in October to 132Mcmpd, while production of shale gas alone rose by 243% to 25mcmpd. AME forecast that Argentina’s natural gas supplies will continue their upward trend through 2038, peaking at approximately 153Mmcpd.