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UPDATE 1-Doubts grow about destination of Peru LNG exports

Stocks

   

Thu May 20, 2010 2:01am IST

* Repsol may ship LNG to Canada instead of Mexico

* Change comes as government faces heavy criticism

(Recasts, adds comment from Hunt Oil)

LIMA, May 19 (Reuters) - Doubts have arisen about where Peru's liquefied natural gas will be shipped after the company in charge of the exports, Repsol YPF (REP.MC), said fuel would initially be sent to Canada instead of Mexico as planned.

Repsol's main partner in the Peru LNG consortium, which will finish building a gas liquefaction plant next month, said on Wednesday it was unaware of the change in plans. And Peru's government has said several times the gas would go to Mexico.

"I'm not aware of this ... in any case, our plan is to export to Mexico," Carlos del Solar, the head of Hunt Oil Peru, told Reuters.

On Tuesday, a Repsol official said gas would first go to Canaport in New Brunswick, Canada as a receiving plant in Manzanillo, Mexico will not be ready for about a year. [ID:nN18143124]

"Supplies will head to Canaport from Peru, either through a swap or through direct supplies, because Manzanillo is not completed yet," the Repsol official said.

The apparent change in plans comes as Peruvian President Alan Garcia faces sharp criticisms over plans to export gas, which critics say could contribute to domestic shortages in the future. The Peru LNG plant would have capacity of 4.5 million tonnes per year.

Garcia's opponents also say there is nothing that restricts the companies from eventually sending the fuel to Chile, which is Peru's neighbor and widely viewed in Peru as a rival.

Peru's Energy Minister Pedro Sanchez said on Tuesday that the gas would not wind up in Chile. (Reporting by Marco Aquino and Terry Wade; Additional reporting by Edward McAllister in New York; Editing by Marguerita Choy)

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