Penco Lirquén FSRU

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Penco Lirquén FSRU, also known as the Octopus project, is a proposed floating LNG terminal in Chile's Biobío region.

Location

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Project Details

• Terminal owner: Biobiogenera [50%], Cheniere Energy [50%]
• Terminal parent company: Biobiogenera [50%]; Cheniere Energy [50%]
• FSRU owner: Höegh LNG
• Location: Concepción Bay, Bulnes, Biobío region, Chile
• Coordinates: -36.683333, -73.033333 (approximate)
• Capacity: 2.7 mtpa, 0.39 bcfd
• Status: Proposed
• Type: Import
• Finance: US$850 million loan package from ten international banks
• Start year: 2027

Note: mtpa = million tonnes per year; bcfd = billion cubic feet per day

Background

Formerly known as the Octopus LNG project, Penco Lirquén was to comprise a floating storage regasification unit (FSRU) in Concepción Bay. The LNG project was expected to have capacity of 0.39 bcfd and send gas to the onshore network via a 2.5km submarine pipeline.

The Penco-Lirquén LNG import terminal was proposed as a joint venture of Biobiogenera (50%) and Cheniere Energy (50%) to provide LNG to the proposed El Campesino power station, which was to be developed as a joint venture between Biobiogenera and Electricite de France (EDF).

In May 2015, Norway’s Höegh LNG signed a 20 year contract with Penco-Lirquén's predecessor, Octopus LNG, to provide the FSRU (floating storage and regasification unit) for the LNG import project. As of May 2017, the project had been delayed 12-18 months due to environmental concerns.

After six years of delays, including the revocation of the project's original environmental license by Chile's Supreme Court for failure to properly consult with indigenous groups, the terminal was unanimously approved by the Regional Commission for Environmental Assessment in August 2019.

However, as of February 2020, construction plans remained suspended due to new legal challenges stemming from the project developers' inadequate consideration of citizen input during the environmental assessment process, including failure to consult with the Koñintu Lafken Mapu and Peumellén indigenous communities. As of May 2021, opponents of the project were reportedly preparing to present their grievances before the Committee of Environmental Ministers, with plans to take their case to Valdivia's Environmental Court if necessary.

As of June 2022, the Penco Lirquén LNG terminal and the El Campesino power station both appeared to be shelved, as the owners had provided no further news about either project in more than two years, and 2021 news reports indicated that a different gas and solar power project had been proposed for the same site.

Environmental approval of the project in October 2023

In October 2023, nine years after the project was first proposed, Chile's Committee of Ministers gave unanimous environmental approval for the Penco Lirquén LNG terminal to move forward. The mayors of the neighboring communities of Talcahuano and Penco immediately announced plans to revive legal opposition to the project. As of July 2024, forecasts called for the terminal to begin commercial operations in 2027.

Financing

In December 2016 a group of ten international banks agreed to provide loans totalling US$850 million for the development of the Penco Lirquén LNG terminal and the 640MW El Campesino combined cycle gas turbine plant. The banks involved included DNB Nord, Societé Générale, Mitsubishi UFJ, Crédit Agricole, Sumitomo Mitsui Banking Corporation, BNP Paribas, KDB, Scotia, BCI and Siemens.

Opposition

Protestors speaking out against Penco-Lirquén (Octopus) gas project, source: Resumen

On June 28, 2016, the Evaluation Commission of the Biobio Region approved the LNG terminal project. Various parts of the province were subsequently blockaded by citizens protesting the project's approval on the grounds that proper environmental regulatory procedures had not been followed. In addition to the blockades, there was a strike among public sector workers who then demonstrated in the streets. According to reports, the demonstrations were met with police repression. In the neighborhood of Lord Cochrane and the Lirquén Hospital, demonstrators blockaded traffic in protest of the Penco-Lirquén terminal and its potential environmental impacts. Seven people were arrested.

In February 2017, the LNG terminal project had its environmental approval revoked by the Chilean Supreme Court. The ruling was the result of a lawsuit brought forward by the Konintu Lafken Mapu Indigenous association. The court stated that the original permit granted by the regional environmental evaluation service acted illegally by prematurely terminating the project’s indigenous consultation phase.

Civil society and environmental groups have continued to protest against the Penco-Lirquén project for a variety of reasons, including the terminal's perceived impact on air, soil and water quality, tourism, and the local fishing economy.