Chile is considering exporting LNG to Argentina in mid 2009, when a government-backed LNG regasification plant is scheduled to be on-stream as part of efforts to diversify the country’s energy sources.

Following moves by Argentina to begin cutting back its natural gas exports, a consortium led by BG Group PLC and state oil company Enap is building an LNG regasification plant in the central Chilean port of Quintero.

Enrique Davila, Enap chief executive, said at a conference on energy, “The Quintero plant will have a maximum capacity of 18 million cubic metres a day, which gives us the possibility of exporting LNG in 2009 or 2010, to Argentina.”

The construction of the plant in Chile could also provide a sense of leverage for the country and ensure that both the South American countries have their energy requirements catered for in the short term.

The LNG supply is supposed to help Chile out of the current energy squeeze it has been experiencing since 2004, when neighbouring Argentina began reducing exports to meet its own growing demand. Natural gas price freezing in Argentina has discouraged the development of local production and the country itself is now increasingly reliant on imports from Bolivia.

But with the advent of the Quintero plant, it is suggested that a swap deal could be proposed in which the Chilean government would ensure LNG exports to Argentina in the longer term after 2009, in return for guaranteed Argentine gas until the plant comes on-stream.

Davila commented, “It’s a sort of swap in time.”

The Chilean government, through state copper giant Corporacion Nacional del Cobre, is also giving its support to an LNG regasification plant in the country’s northern mining belt, also scheduled to begin in 2009 and due to be operated by French-Belgian energy company Suez.