(Updates with Suez company response)

SANTIAGO (Reuters) - Chile and France's GDF Suez
have agreed to relocate a planned $1.1 billion thermal
power plant, following a public outcry over fears the project
would harm a reserve that is home to endangered penguins.

President Sebastian Pinera said a new location, which he
did not disclose, was ideal to protect the pristine nature
reserve in northern Chile.

"We have agreed with Suez to change the location of the
Barrancones plant ... so we can protect this wonderful reserve,
not only for our generation but for future generations," he

Suez said later in a statement that it would respect the
decisions of Chilean authorities and "analyse whether better
alternatives can be found to bring solutions to the growing
energy needs of Chile."

The government's regional environmental commission in the
Coquimbo region, Corema, had approved construction of the 540
megawatt Barrancones plant on Tuesday, triggering street
protests in Santiago, the capital.

Surging energy demand in Chile is putting Pinera in a tough
spot between economic needs and environmental protection.
During his campaign, he vowed to oppose projects that
threatened nature, communities or the quality of life.

While Pinera, who took office in March, is known as an
environmentalist, analysts say he could choose to move ahead
with key energy projects to satisfy the country's energy

A new location for the plant would likely delay the
project, however, Suez did not comment on potential delays.

The nature reserve is home to endangered Humboldt penguins
and small otters called "chungungos," while whales and dolphins
occupy the nearby marine habitat.
(Reporting by Santiago Newsroom; Editing by Marguerita Choy)