MercoPress. South Atlantic News Agency

Argentine only has natural gas reserves for the next seven years

Lack of investment in exploration has been decisive in the current situation according to the Mosconi Institute

Argentina’ natural gas reserves dropped to half their 2000 level when they totalled 378.862 million cubic metres, which means at the current consumption rate in seven and a half years the country will ran out of the vital fuel, according to a report released this week in Buenos Aires.

“The level of reserves experienced an inter-annual drop of 4.9% in 2009 and is insufficient for a country that like Argentina which bases its consumption in this kind of fuel, natural gas”, said the Energy Institute General Mosconi.

The report adds that at the present rate of demand increase for gas and power, Argentina is incapable of ensuring self sufficiency which means “it needs in a growing and irreversible way” to increase high-cost fuel imports with a negative impact on the country’s finances.

The release of the report coincides with the considerable reductions and blackouts imposed on the manufacturing sector by the Kirchner couple administration to ensure the home demand struck by severe freezing winter temperatures.

This has set alarms ringing in Argentina’s manufacturing sector because contrary to official announcements the situation, year after year, seems to worsen.

The report from the Mosconi institute argues that the fall in Argentine hydrocarbons reserves is closely linked to the exploration investments of the last three decades.

Apparently natural gas production in Argentina has been sustainedly falling since 2004 and in 2009 was equivalent to 48.413 million cubic metres, down 7.3% in the period.

“During the 2000 decade, 484 exploration wells were drilled, less than half those averaged during the nineties, and 47% less if we compare the number to the eighties”.

Similarly oil production in the last ten years accumulates a 16% contraction which means reserves fell at a similar rate in the period having reached 398.213 cubic metres.

The Mosconi report forecasts that Argentina’s crude reserves will suffice for the next eleven years at the most, and given the limited production capacity it has been forced to greater and progressive imports of natural gas from Bolivia and liquid natural gas, LNG from other sources, as well as significantly limiting the supply of fuel to feed the manufacturing sector and generate power.

Argentina suffered its first major energy crisis in 2004 when it was forced to resume Bolivian natural gas purchases and ration supply to Chile, in spite of existing international contracts, besides cutting the supply of power to the manufacturing sector and the auto industry.