Punta Arenas in the Magallanes region is swelling with immigrant labor, oil prospectors and high-flying investors eager to cash in on what is generally seen as the coming oil bonanza.

Local estimates said the city's population now well exceeds the 120,000 recorded in a 2002 census and 154,000 surveyed in 2008.

Punta Arenas is also becoming a major tourism destination because of easy access for Antarctic expeditions.

The entire southern region was chosen for regeneration as part of Chilean President Sebastian Pinera's plans when he took office last year. But riots and strikes over fuel prices shook the government into action.

Despite being poorer than northern Chile, Punta Arenas still surprises visitors with its high prices for essential commodities, including fuel.

Officials said the new investment will be made up of contracts secured with national and international oil companies.

Oil exploration in the area gained momentum as prices soared in response to a perceived global shortage of supplies, unrest in the Middle East and as response to economic recovery.

Rene Ampuerto, the regional Energy Ministry representative, hinted the actual investment could be higher.

"These numbers are far superior to the commitments of the oil companies in the CEOP, which really established floor prices from which to work on," he said.

A CEOP is a "Special Operating Contract" that Chile, represented by the Mining Ministry, signs with a company or consortium of companies for the exploration and exploitation of hydrocarbon wells.

As part of the overall development plan, oil companies operating in Magallanes region and Chilean Tierra del Fuego will be drilling at least 60 exploratory wells to have firmer estimates on hydrocarbon reserves and the potential for developing them.

Last year companies drilled about 40 exploratory wells.

Chile has been aiming to develop the region for nearly a decade but progress has been slow. In 2006 the previous administration organized an international bidding process to get started on 10 potentially rich hydrocarbon blocks in the area and awarded licenses for nine. Since that time, however, crude oil prices have risen steadily, giving investors new incentives.

Chile also aims to achieve some measure of energy security as its population grows and demand for energy continues to rise.

Located on the Brunswick Peninsula, Punta Arenas is the third largest city in the Patagonian region. Most of the peninsula's territory is uninhabited but city planners foresee major changes afoot as the population growth builds up pressure for new housing and amenities.

Punta Arenas for long was considered the world's southernmost city but Ushuaia in Argentina is farther south and claims that status.

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