French energy giant Suez has signed a memorandum of understanding with Chilean utility GasAtacama formalizing their alliance for the study and development of a reception, storage and regasification terminal for liquefied natural gas that they plan to build in Mejillones.

The goal of the liquefied natural gas (LNG) terminal will be to offer secure natural gas supply to all the electricity generators and users in the north of Chile.

Suez and GasAtacama’s LNG terminal project includes a fast-track phase that will be operational by the end of 2008 and will consist of an offloading dock and an onshore regasification plant, which will inject natural gas into the northern grid of the country and be used for industrial consumption.

During the fast-track phase, LNG will be offloaded as and when the regasified natural gas is needed at the gas-fired power stations. The LNG carrier will, therefore, act as a storage tank.

The final design of the project includes the construction of an onshore LNG storage tank, to which an LNG carrier can transfer its entire load in less than 24 hours. The storage tank could be operational by the end of 2010. Estimated investment in the entire project amounts to between $300 million and $350 million, with the fast-track phase taking up around half of that amount.

This project will help maintain a center of diversified generation and secure access to international natural gas, at the same time it will support the viability of regional natural gas so that the generation of electricity will be feasible at a cost that competes with other fuels, stated Manlio Alessi, general manager of Suez Energy Andino, Suez Energy International’s Chilean subsidiary, and Rudolf Araneda, general manager of GasAtacama.