Argentina's Govt. Announces Gas Export Rationing

Neuquen Basin
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Argentina's government has announced plans to cut natural gas exports in an effort to avoid domestic shortages this winter, local newspapers reported.

Energy minister Daniel Cameron announced the decision in resolution 265, which suspends the export of surplus gas that could be used to meet domestic demand, and calls for the drafting of a program to cut gas exports.

Argentina currently has a deficit of about 5 million cubic meters a day of gas, but gas-fired thermo generators are unable to keep up with demand, which has resulted in power cuts for large industries.

The country that would be most affected by gas export rationing is Chile, which accounts for 90% of Argentina's overseas gas sales, local newspapers reported. Both Brazil and Uruguay also import gas from Argentina.

However, Chilean energy officials have met with their Argentine counterparts in Buenos Aires and tried to calm fears that gas supplies could be shut off at any moment. The director of Chile's national energy commission (CNE), Luis Sanchez, said exports to Chile are not likely to be affected by the resolution and even if they were, measures would be taken to mitigate the impact. Chile's economy minister Jorge Rodríguez went to Buenos Aires on Friday for an emergency meeting during which he asked Argentine authorities to respect the conditions of export contracts with Chile, newspapers reported.

Chilean thermo generators depend on Argentine gas to generate about 50% of the country's electricity and generators are worried their supplies could be cut, newspaper Diario Financiero reported. However, cutting gas exports to Chile will not help Argentina avoid domestic supply cuts because the real problem is in the transport capacity from the Neuquen gas fields to Buenos Aires, an industry source told BNamericas.

Rationing exports may serve a political purpose but does not solve the basic problem, which is that gas rates are still frozen at their "pesofied" level and companies will not invest "one peso" in gas exploration until prices go up, the source said.

President Nestor Kirchner has taken a hard line, calling on gas producers to invest immediately or else the state will "use all the means available to make them take on this responsibility," he said in a statement. Gas producers "must invest - they will have to give us the gas and power we need, and we will not cave in to pressure to provide other benefits some of them may be seeking," Kirchner said. However, gas producers in Argentina remain adamant that investment will only follow rates increases.

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