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Gulf Oil Spill to Pressure Oil Exploration-Chile Minister

Source: Reuters 6/19/2010, Location: North America

The large oil spill in the Gulf of Mexico will put substantial pressure on the industry to halt offshore deepwater drilling as long as the cause of the incident remains unclear, Chile's Energy Minister Ricardo Raineri said.

"I think that right now it's too soon to speculate about the effects, but we can expect that as long as we are not clear about what failed, there's going to be a huge pressure to stop in some sense oil exploration in deep water," he told Reuters in an interview.

"The impact of that in the short term, I think, is not going to be important, but we should be looking in the medium, long-term. There is an important effect on new oil wells that might have a long-term effect on oil prices."

The U.S. government has imposed a six-month moratorium on further drilling in the Gulf of Mexico which could be the prelude to additional measures that would limit domestic oil output in the world's largest energy consumer nation.

Raineri was visiting Fukui, northwestern Japan, for a one-day gathering of energy ministers and senior officials as part of the Asia-Pacific Economic Cooperation (APEC) forum.

U.S. Deputy Secretary of Energy Daniel Poneman said earlier in Fukui that there was no significant concern for short-term oil supply after the spill at BP's Deepwater Horizon drilling rig.

Argentina Exports
Raineri also said Chile's liquefied natural gas import terminal in Quintero Bay could double its capacity to about 20 mln cubic meters per day with marginal additional investment and that Chile may be able to export some gas to Argentina.

"Currently, we think that there is enough capacity to export some LNG gas to Argentina," he said.

"That is something we should talk (about) in bilateral meetings between Chile and Argentina ministers. We are planning a bilateral meeting for the second semester of the year, where we can make maybe swaps, gas swaps.

And also selling gas directly to Argentina is a possibility."

Boosting LNG capacity is part of the country's push to break its dependence on unreliable supplies of fuel, though analysts say LNG imports alone will not be enough to reverse its recent surge in diesel-fired power generation.

Raineri also said that the quake-hit 116,000 barrel-per-day Bio Bio refinery should be fully operational by the end of June.

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