PLANS FOR ARGENTINA-CHILE GAS PIPELINE ADVANCE

A project to move Argentina's gas to growing markets in Chile has received a couple of boosts.

Santa Fe Energy Resources Inc.'s Argentine unit Petrolera Santa Fe and partners in Block CNQ-10 in Argentina's Neuquen province granted purchase rights in the block to an Argentina electricity producer. The deal could lead to gas sales to Chile.

And Overseas Private Investment Corp. (OPIC), Washington, D.C., plans to support the $600 million pipeline project to link gas fields in western Argentina with Central Chile.

SANTA FE DEALS

Santa Fe, with certain partners in its Block CNQ-10, granted to power producer Central Puerto SA the right to buy as much as a 10% interest in the block.

Santa Fe said the deal makes available to the partners under certain conditions an opportunity to sell substantial added gas volumes in 1998 to Chilgener, the largest power producer in Chile and the main affiliate of Central Puerto.

The gas would be delivered to Santiago, Chile, on completion of the proposed pipeline from Argentina to Chile, in which Chilgener is a partner with Canadian transmission company Nova Corp. and Chilean gas distributor Gasco.

If Central Puerto exercises its purchase option, working interest ownership in the block would be Santa Fe 19.9%, BHP Petroleum (Argentina) Inc. 31.1%, monument Exploracion Ltd. 19.9%, Soc. Petrolera Internacional SA 15.7%, Central Puerto SA 10%, and Cia. General De Combustibles SA 3.4%.

Meantime, Santa Fe signed a long term natural gas sales contract covering production from Sierra Chata field on Block CNQ-10.

Terms call for Argentine gas distributor Metrogas SA to buy 106 MMcfd starting in May 1995 and continuing through 2001. The contract establishes competitive, seasonally adjusted, and escalating sales prices through 1996. The 1997 winter sales price and prices thereafter will be based on market conditions.

Sierra Chata field was discovered in April 1993. Six wells have been completed in the field for a combined test rate of 130 MMcfd. Four more wells are to be drilled this year.

Santa Fe has chosen Mustang Engineering Inc., Houston, to coordinate design and construction of a $76 million gas gathering and processing facility in the field.

OPIC SUPPORT

OPIC agreed to support the 750 mile pipeline that will extend from Argentina's Neuquen province across the Andes Mountains to Central Chile (OGJ, May 9, p. 24).

OPIC Pres. Ruth Harkin and Tenneco Gas International Pres. Steve Chesebro signed a protocol that details U.S. government financing and risk insurance for the project once all criteria are met.

It insures Tenneco against financial and political risks incurred through its 25% interest in the project. Tenneco said it might ask OPIC for as much as $200 million of each coverage.

OPIC said the pipeline will require the purchase of $400 million in goods and services from the U.S. and $500 million from Argentina and Chile.

The project aims to provide gas to 600,000 residential, commercial, and industrial users in Chile, enabling them to switch from more polluting and less efficient fuels.

Construction is to begin in March 1995.