Chile derives its energy mainly from petroleum and natural gas (60 percent), hydroelectric power (25 percent), and coal (15 percent). Unlike other countries in Latin America, Chile has been able to make effective plans for the development of the electricity sector. No bottlenecks are expected in this sector, and most analysts predict that it will continue to expand at a healthy pace. The country is endowed with ample hydroelectric resources and has an extensive electric net formed primarily by hydroelectric plants. For example, the Tocopilla station feeds electricity to the huge Chuquicamata and La Escondida copper mines, as well as to cities in northern Chile. An interesting feature of the system is that, although the central net is thoroughly interconnected, there are many individual producers. Since the late 1980s, there has been a marked increase in the importance of small ("other") producers.

As part of the final stages in the Pinochet regime's privatization process, beginning in 1985 the two large state-owned utilities, the National Electric Company (Empresa Nacional de Electricidad--ENDESA) and the Chilean Electric Company (Compañía Chilena de Electricidad--Chilectra), both Corfo subsidiaries, were privatized. Now the entire electricity sector basically is run by private companies. The government, however, established a supervisory system that ensures electricity companies a fair return. This keeps prices under reasonable control.

Domestic petroleum production has suffered a steady decline since 1982, from 2.48 million cubic meters to 1.38 million cubic meters in 1990, a reduction of 46 percent. In an environment of fast economic growth and rising demand for energy, this decline in production has translated into a much faster decline in the share of domestic production in total consumption. Although domestic production satisfied 35 percent of domestic consumption in 1986, in 1992 it met only 13 percent of Chile's needs. Consequently, Chile's oil import bill more than doubled between 1986 and 1990. The country's oil reserves, declining at a rate of 10 percent a year, stood at 300 million barrels in early 1992.

Petroleum exploration efforts have been unsuccessful since the 1970s. The National Petroleum Enterprise (Empresa Nacional de Petróleo--ENAP) has diversified its activities outside Chile with production contracts with Argentine, Brazilian, Colombian, and Ecuadorian companies. Exploration activities have increased in the Atacama Desert and the Strait of Magellan. In late 1992, ENAP began installing a US$18 million oil-drilling platform in Punta Arenas, the first of four that the company planned to operate in the Strait of Magellan in a joint venture with Argentina's state-owned oil company. About two-thirds of the crude oil produced in Chile came from offshore platforms in the Strait of Magellan. In 1991 domestic consumption was averaging 138,527 barrels per day (bpd) and was growing at a 5 percent annual rate.

Pipelines for crude oil products totaled about 775 kilometers in length; for refined petroleum products, about 785 kilometers; and for natural gas, about 320 kilometers. In mid-1992 Chile and Argentina agreed to build a 459-kilometer trans-Andean pipeline, designed to carry US$500 million in crude oil a year, or 94,000 bpd, from Neuquén, Argentina, and to help meet Chile's need for refined oil. Both countries also approved a US$1 billion project to build a 1,200-kilometer gas pipeline to feed Argentine natural gas to Santiago and other Chilean cities by 1997. In 1989 Chile's proven natural gas reserves totaled 46.1 billion cubic meters, of which 41.9 billion cubic meters were onshore and 4.2 billion cubic meters were offshore.

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Source: U.S. Library of Congress