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OECD/IEA 2012

Emergency Response Assessment of CHILE

On no one quality, on no one process, on no one

country, on no one route, and on no one field must

we be dependent

W. Churchill

Cuauhtmoc Lpez-Bassols

Energy Analyst, IEA


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OECD/IEA 2012

Chiles Energy Mix

Total primary energy supply

Chiles TPES has grown 4.2% per year since 1990 (to2009), in line with its economic development.

Oil 54%, Combustible renewables/waste 17%, Coal 13%,Gas 8% (2009).

Gas: 26% TPES in 2004 before flows were restricted2

26%

8%

40% 54%


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OECD/IEA 2012

Oil

Domestic production down from 14% in 1990 (15 kb/d) to

2% (3.6 kb/d) in 2010

Demand 333 kb/d (2010)

Transport 46%/ Power sector 17% (unusual for OECD =5%)

Oil products for power generation increased from an average

share of 2.4% in 2000-2006 to 28% in 2007-2009.

3

-

20

40

60

80

100

120

140

160

180

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Fuel Oil Gas/diesel oil

Kerosene for domestic use Jetfuel Kerosene

Gasoline LPG

kb/d

29.5% Gasoil

for power

generation

2.4% Gasoil for

power generation

Imports ofGasoline/Diesel/Kero:100% from OECDcountries

Diesel (high spec): US37%, Rep. of Korea 35%,Japan 28%.


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OECD/IEA 2012

Oil Infrastructure

Oil Pipelines Sonacol owns 6 pipelines and three terminals in

the central region.

Refining capacity

ENAP only refiner in Chile

Three refineries : 240kb/d or 70% prod. demand

Storage capacity

Total capacity: 22mb Crude: 1/3Products: 2/3

Average current utilisation rate 37%

Stock level: 30.8 days of netimports (IEA

methodology)4


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OECD/IEA 2012

Key Oil Emergency Policy Issues

No NESO, but the National Emergency Office (ONEMI) isresponsible for coordinating efforts during emergencies

A 25 days stock-holding obligation on industry.

No regulation to determine how reserves are quantified,

administered or managed in emergencies

Study on 90-day stockholding estimates cost appears

excessively high

No clearly established demand restriction policy for liquid

fuels.

No/limited fuel-switching and oil surge capabilities.

Strict motor fuel specifications can pose a short-term

supply risk due to lack of available fuel in international

markets which meets standards

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OECD/IEA 2012

Natural Gas

Peak demand of 8.3 bcm in 2004.

Gas consumption plummeted to 2.2 bcm in 2008 as aresult of curtailment of piped gas from Argentina.

LNG demand has grown in 2009 to 2.7 bcm

41% for power generation (2010)

6

Natural Gas Consumption by Sector

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1992

1996

2000

2007

Petrochemical feedstocks

Transformation

Other

Commercial and Residential

Industry

Transport

Indigenous production

mcm


7/21 OECD/IEA 2012

Gas Infrastructure

LNG terminals

Mejillones (2 bcm/year)

Theoretical send out rate 5.5 mcm/d

LNG used mainly for power generation

Quintero (3.9 bcm/year)

Maximum send out rate 10 mcm/d

Pipelines

Built in 1990s linking Chile with Argentina, now

mostly disused.

Storage

No stand-alone gas storage sites.

Storage capacity exists at LNG terminals: 334,000

cum and 160,000 cum.

No obligation on LNG terminal operators to hold a

minimum amount of stocks.

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8/21 OECD/IEA 2012

Natural Gas Emergency Policy

No public or mandatory industry gas stocks

No specific response system for handling gas

emergencies. MoE is developing a regulation establishing how

industry must respond to situations in which gas

supply is at risk.

8


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Electricity

SIC

SING

9

Rapid electricity growth from 40TWh in 2000 to 60TWh in 2010.

Demand growth expected at 6% pa for next 10 years.

Growth forecast to occur in the SIC

Industrial users account for nearly 70% of total electricity demand

Hydro power dominates the electricity mix; representing 46% of SIC

While gas (57%) dominate the generation mix in SING

Electricity demand


10/21 OECD/IEA 2012

Electricity Infrastructure

Chiles power system : 4 regional powersystems.

The SIC: populous central region including

the main consumption centres: mainly

hydro The SING: north; serves the major mining

and processing operations: mainly thermal

The Aysn System in the south and the

Magallanes System in the far south; smalland isolated (generating capacity of around

150 MW).

10


11/21 OECD/IEA 2012

Chile Commended for - Oil

Chiles wide diversity of import sources.

MoE for its efforts in developing a market-

monitoring system for supply and demand.

MoE for commissioning a study on thepossibility of meeting the IEAs 90-day

stockholding obligation (although costs seem

excessively high).

MoE for a study into demand restraint

measures.


12/21 OECD/IEA 2012

Some Key RecommendationsOilSupply, Demand and Market Issues/Emergency

Encourage upstream investments as domesticproduction provides a good buffer for energy

security. (rec 1).

Reconsider the perceived value of reducing price

volatility-SIPCO (rec 3).

Introduce Third Party Access to storage facilities;

could help to optimise usage of existing storage

facilities, and discourage uncompetitivebehaviour (rec.4).

Develop a comprehensive emergency plan and

organisation for the energy sector, to improve

emergency preparedness. (rec.7)12


13/21 OECD/IEA 2012

Some Key RecommendationsOil (2)Supply Infrastructure- Emergency Policy

Continue to improve data collection, notably

requiring power plants and mining companies to

report their tertiary stock levels. (rec. 15)

Impose obligation on dual-fired electricitygenerating plants to hold minimum amount of

diesel stocks. (rec. 16)

Clarify process and conditions for authorising

and monitoring waivers for oil productspecifications in the event of an oil supply

disruption. (rec 19).

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14/21 OECD/IEA 2012

Chile Commended for - Gas

The development of two LNG terminals within a

very short period of time, which provides a

significant source of energy security (flexibility

and storage).


15/21 OECD/IEA 2012

Key RecommendationsGasSupply, Demand and Market Issues -Infrastructure

Encourage upstream investments, including furtheranalysis of unconventional gas prospects. (rec 20)

Increasing LPG import capabilities beyond the two

existing terminals. (rec. 24 )

Investigate storage capacity potential of under-utilised

trans-Andean pipelines. (rec. 26)

Consider imposing a minimum stockholding obligation

on the Quintero LNG terminal, based on a worst-case

scenario for the weather that would affect the Bay ofQuintero. (rec. 27)

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16/21 OECD/IEA 2012

Key RecommendationsGas (2)Supply Infrastructure-Emergency Policy

Consider building stocks of LPG throughout the

supply chain in order to better cope with supply

emergencies. (rec. 28)

Develop a comprehensive emergency policyframework for natural gas disruptions, including

priority users, demand restraint measures,

interruptible contracts, forward planning and

TSO-like responsibilities. (rec. 31)

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17/21 OECD/IEA 2012

Chile Commended for - Electricity

Efforts to identify and address the lessons

learned from recent emergency events.

Steps taken to diversify its electricity generation

mix, especially through the deployment of newnon-conventional renewable energy.


18/21 OECD/IEA 2012

Key RecommendationsElectricityGeneral Issues

Review and clarify regulatory and operational

responsibilities to improve the timeliness and

effectiveness of decision-making in response to

emergency events.(rec.32)

Strengthen the independence and objectivity of

system operation, notably by reforming

governance and funding arrangements to

remove conflicts of interest. (rec.33)

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Key RecommendationsElectricity (2)

System Security and Adequacy

Review the application of current operational

and technical standards, like the N-1 standard,

to ensure that they provide a strong,

comprehensive and enforceable foundation for

delivering power system security. (rec. 35)

Assess the effectiveness of the Rationing Decree

Mechanism, with a view to improving its cost-

effectiveness, including the introduction ofmarket-based demand response elements. (rec.

40)

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20/21 OECD/IEA 2012

Key RecommendationsElectricity (3)

System Security and Adequacy

Streamline investment approvals, to minimiseprocessing delays, improve certainty and bring forward

investments to ensure electricity security. (rec.43)

Examine options for an interconnector between the SIC

and SING to improve power system reliability andresilience. (rec. 46)

Examine an obligation for adequate supplies of back-up

fuel to maintain electricity security during an

emergency. (rec. 47)

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