Chile sees higher diesel imports in '08

By Monica Vargas

SANTIAGO (Reuters) - Chile's diesel imports should grow 5-10 percent in 2008 from a year earlier due to a domestic fuel shortage, state oil company ENAP said on Friday, with consumption expected to spike in the coming winter months.

Chile has imported around 700,000 cubic meters of diesel (4.4 million barrels), used in electricity generation amid a shortage of natural gas, per month so far this year -- in line with 2007 but more than triple 2006 levels -- Chief Executive Enrique Davila told the Reuters Latin America Investment Summit in Santiago, Chile.

"Diesel (consumption) will increase as long as ... natural gas is not arriving basically for the thermoelectric plants," Davila said. "In financial terms, obviously there is a strong impact as a country that imports crude and diesel."

ENAP has a refining capacity of 230,000 barrels a day of crude and paid an average $97 dollars a barrel during the first quarter of this year. That compares with $72 a barrel during the same quarter last year.

Domestic diesel consumption doubled to 1.1 million cubic meters (6.9 million barrels) a month in 2007 from a year earlier, and could spike to as much as 1.5 million cubic meters (9.4 million barrels) a month this year during the looming Southern Hemisphere winter, he added.

Chile has to import nearly all of the fuels it consumes, and its hydroelectric generation has been hard hit by one of the worst droughts in decades, which has seen reservoir levels fall.

The impact has been compounded by reduced gas imports from Argentina, which along with high diesel generator running costs have combined to raise the specter of possible energy rationing.

Around 18 ships are arriving at Chile's coastline each month loaded with 45,000 cubic meters (283,000 barrels) of diesel each, Davila said.