After several months at loggerheads, Chile's largest power
generator Empresa Nacional de Electricidad SA (EOC, ENDESA.SN) and
BG Group PLC (BG.LN) agreed to a new liquefied natural gas supply
contract, Endesa said late Tuesday.
After Henry Hub prices declined sharply, BG sought to
renegotiate the conditions on long-term LNG supply contracts signed
in 2007 with Endesa, state oil company Empresa Nacional del
Petroleo SA, or Enap, and Chile's largest gas distributor,
Metrogas.
In a statement, the power producer said the gas deal will help
the development of new gas-fired projects in central Chile.
Under the new 20-year deal, BG will sell an undisclosed
contracted volume at $8 a million British thermal units. Any
additional gas over the contracted volume will be sold at
$11/MMBtu, local Diario Financiero reported Tuesday citing
undisclosed sources.
On Tuesday, natural gas futures settled near $4/MMBtu on the New
York Mercantile Exchange.
An Endesa spokeperson declined to comment on the details of the
deal saying the contract isn't signed yet.
Last year, BG reached agreements with Enap and Metrogas, but not
with Endesa which, as the negotiations turned sour, blocked the
U.K. company's sale of a 20% stake in the GNL Quintero SA LNG
regasification terminal, in central Chile, to Spanish energy
company Enagas SA (ENGGY, ENG.MC).
BG, Enap, Endesa and Metrogas are all partners in the GNL
Quintero terminal. After selling a 20% stake in the LNG venture for
$176 million to Enagas, BG needed the consent of its partners to
sell its remaining 20% stake.
The U.K. company is in the process of divesting noncore assets,
such as its stake in GNL Quintero, to finance its $22 billion
2012-2013 capital expenditure plan.
BG remains committed to the sale of its remaining stake in GNL
Quintero.
"We are confident a transaction will be completed under a new
timeline," a BG spokeperson said.
Write to Graciela Ibanez at graciela.ibanez@dowjones.com