Boston, MA -- (SBWIRE) -- 12/21/2012 -- Chile's small resource base makes the country heavily dependent upon imports to satisfy demand and promote economic growth. The country was required to import 97% of total oil consumption and 66% of its natural gas consumption in 2011. These dynamics will persist for the foreseeable future, despite some long-term upside risks stemming from the country's shale gas potential. As such, strategic investments into LNG import capacity have been critical for Chile's energy security.

The key trends and developments in the Chilean oil & gas sector are:

- In terms of domestic production, we forecast both oil and gas to rise moderately in the coming years, with oil production increasing at an average of 1.8% through 2021 and natural gas increasing at an average rate of 1.1% through 2015 and then declining thereafter. At the same time, Chilean consumption of oil and natural gas will steadily increase, adding additional pressure on the government and state-owned Empresa Nacional del Petroleo (ENAP) to increase imports from abroad. Due to the country's small resource base, Chile was required to import 97% of total oil consumption and 66% of its natural gas consumption in 2011.
- Two LNG import terminals service different regions of the country. The Quintero regasification terminal provides natural gas to the majority of the country's population, while the Mejillones terminal is well positioned to service the lucrative Chilean copper mines in the north. Due to the energy intensity of the copper industry, there is significant interest in expanding the capacity at Mejillones from its current capacity of 5.5 thousand cubic metres per day (mcm/d).
- In terms of consumption, we forecast that oil use will rise from an estimated 322,740 barrels per day (b/d) in 2011 to 345,650b/d by 2016. It will continue to increase steadily at an average rate of 1.8% to 2021. If Chile is to boost oil production, its best hope lies in exploration taking place in the Magallanes region in the south of the country. We are also forecasting an average gas consumption rate of 7.9 billion cubic metres (bcm) per year throughout the 10-year forecast period.
- The advent of technology capable of extracting oil and gas from shale formations has given Chile reason for optimism over the long term. Although still very preliminary, the EIA estimates that Chile's oil- and gas-producing Magallanes region may also contain 1,812.5bcm of technically recoverable shale gas resources. Should even half of these estimated resources become economically recoverable, the amount of gas produced would be sufficient to meet a 7.9bcm/year consumption rate for approximately 115 years. Although we have not taken shale gas production into account in our forecasts, it remains a significant upside risk in the long term. The Chilean copper mining industry has already expressed interest in utilising shale gas to power production.

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