Chile's chamber of deputies has formally requested President Gabriel Boric to act over threatened natural gas supplies for 2023 because of alarm that French utility Total Energies will breach its LNG contracts with compatriot Engie.
Engie Chile has long-term contracts with Total for the delivery of seven shiploads of LNG to Mejillones in northern Chile but delivery dates in 2023 have not been given for four of the shipments as part of the annual planning process.
The four shiploads represent 14.5 trillion Btu or around 400mn m³ of pipeline gas — the equivalent of 18pc of Chile's annual gas supply requirements.
Total's motivation is to "favor" LNG reserves in Europe as a result of the energy crisis caused by the Russia-Ukraine war, according to a recent presentation given by energy minister Diego Pardow to a congressional commission.
Total Energies had not replied to Argus' request for comment.
The war has exposed Chile to competition for LNG supplies from Europe, where buyers are prepared to pay higher prices than those in Chilean contracts that are usually associated with pricing based on the US Henry Hub benchmark, Pardow said.
The disruption to gas supplies could raise marginal costs by 10pc on average, with a direct impact on non-regulated, industrial clients, he said.
It is assumed that the fine for breach of contract would be easily met by sales into the European market.
The chamber of deputies' resolution on 13 December requests Boric "to instruct the ministries of energy and foreign affairs to take the necessary measure to ensure adequate gas supplies for power generation in the next few years."
"Total had not confirmed the delivery of 100pc of contracted LNG supply for 2023," Engie confirmed to Argus. "This has been reported to the national grid coordinator (CEN) and pertinent authorities as required by regulations."
