OREANDA-NEWS. Chilean generator Colbun and the Gener unit of US utility AES have confirmed their offers to secure new regasification capacity in a proposed second expansion of Chile?s Quintero LNG receiving terminal.

Cerro el Plomo, run by Israel's IC Power, dropped out of the running.

The three generators had been selected in August as the preferred capacity holders in an open season conducted by GNL Chile, the commercial entity associated with the terminal?s shareholders.

Colbun committed to take 1.4mn m?/d of regasification capacity and Gener to take another 1.2mn m?/d, according to GNL Chile. The next step in the process is the signing of 20-year gas sales agreements.

The two companies also have a first option to pick up the 600,000 m?/yr of proposed capacity that IC Power relinquished.

The second 50pc expansion of the terminal, including an additional 160,000m? storage tank, is expected to be completed in early 2021, coinciding with the start of long-term power purchase agreements that will be awarded in a major auction in April 2016.

The 3.75mn t/yr terminal, located on Chile?s central Pacific coast, received 25 cargoes in the first half of 2015, compared with 21 in the same six-month period of 2014. Deliveries usually dip in the second half of each year as winter rainfall replenishes hydroelectric reservoirs, diminishing the need for thermal generation.

The current capacity holders are Italy's Enel-controlled Endesa, Spanish Gas Natural Fenosa distribution unit Metrogas and Chilean state-owned oil company Enap.

The three firms each own 20pc of the terminal. The remaining 40pc share is held by Terminal de Valparaiso, which is controlled by Spain?s Enagas with 51pc and state-owned Oman Oil with 49pc.

The move by Colbun and Gener to secure the new regasification capacity cements their broad participation in Chile?s electricity market behind leading generator Endesa. Both companies formed part of an initial pool of offtakers in the late 2000s before the terminal was built, but later withdrew in favor of coal as a generation fuel. The two firms buy LNG on Chile?s secondary market for their thermal generating units in the central grid (SIC).

The outcome of the open season increases the likelihood the terminal will be expanded to its full 20mn m?/d design capacity, helping to increase gas-based power generation in line with one of the government?s long-term energy goals. But another goal, to break up an effective oligopoly in power generation, has not been met in the open season.