Chile Eyes Use of US Shale Gas in Early 2016

Chile's state oil company ENAP said on Tuesday it would start using U.S. shale gas during the first half of 2016 via an ongoing supply contract with Britain's BG Group Plc (BRGXF).

Energy Minister Maximo Pacheco was quoted by local media last week as saying that ENAP had signed a long-term deal with Centrica (CPYYY)-owned British Gas, Britain's largest energy supplier, to import shale gas from the United States at the end of next year.

ENAP, in a statement on Tuesday, specified that it is oil and gas firm BG Group that "will be in conditions to supply the fuel once the (U.S. LNG) Sabine Pass terminal starts operating at the end of 2015 or beginning of 2016."

The company said a potential future arrival of U.S. shale gas could diversify Chile's liquefied natural gas supplies and added that it can be imported without tariffs, thanks to the free trade agreement between the two countries.

BG Group has long-running LNG contracts with the Andean country's Endesa Chile, local natural gas distributor Metrogas and ENAP.

A surge in shale gas production in the United States is transforming the global energy market. Once a regular LNG importer, the United States is now set to export significant volumes by the end of the decade. Chile, the leading copper producer, has long viewed gas as a way to alleviate a looming power crunch.

(Reporting by Fabian Cambero; Writing by Alexandra Ulmer; Editing by Dan Grebler)