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Chile has quietly issued its second declaration of independence -- not from Spain this time, but from the rest of South America.
In her state of the union speech May 21, Chilean President Michelle Bachelet announced plans to construct a second liquefied natural gas (LNG) import facility in Chile -- this one in the North, likely at Mejillones -- to provide for expanded copper mining energy needs. This LNG facility should come on line in 2009; the LNG facility already under construction further south in Quintero should come on line in 2008. Together, these facilities should be able to import about 8 billion cubic meters of natural gas -- roughly equivalent to the amount Chile imports from Bolivia via pipelines through Argentina. LNG facilities are also relatively inexpensive and easy to expand to keep up with increasing demand.
Chile's future natural gas demands are not clear. Estimates of a 15 percent demand increase over the next five years are likely unfounded as they were built on the presupposition that Bolivian natural gas supplies would be not only cheap but also reliable. Instead, Chile -- including copper mines in the North -- is looking to coal-fired power plants and possibly further hydroelectric development as a cheaper alternative to the gas-fired plants responsible for most of the country's projected natural gas demand growth.
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