Chile plans exploration risk insurance in tandem with IDB and World Bank

Chile plans exploration risk insurance in tandem with IDB and World Bank Mariposa Drilling Site, Chile (source: Magma Energy)
Alexander Richter 8 Aug 2013

Chile is planning the introduction of an exploration risk insurance model in tandem with IDB and the World Bank on proposed models by development banks.

At a conference in Santiago yesterday, the head of renewable energy at Chile’s Ministryof Energy told the media that Chile is planning to launch an “insurance program for failed drilling” in addition to geothermal funding in 2014.

Additional to the fact of the industry being in an early stage compared to other nations in Chile, the risk of failed wells is holding back investments. This relates to the risk of not finding either the heat or the sufficient vapor/ fluids to operate a geothermal plant with the wells drilled.

The country’s government is now working with the IDB and the World Bank on a drilling insurance to help investors to mitigate the exploration risk. To help with the cost of the planned program, the government is also seeking between $30 and $35 million from the Clean Technology Fund.

As part of the proposal that was provided to CTF, Chile expects to self-fund around $14 million to create a center for geothermal exploration.

The Chilean government has been in discussions with two development banks and is now waiting to either approve or reject their proposed coverage models prior to a meeting with CTF in November.

The final decision on amount and model is expected to be made this year with a possible implementation as early as next year.

With 75 exploration concessions in the country, not that many projects have reached a drilling stage and there is currently no geothermal power generated in the country.

The planned exploration/ drilling insurance would help speed up development and move the country forward towards the goal of up to 1,00-1,500 MW by 2025-30.

Source: BN Americas