Argentina increases 44% wellhead natural gas prices to attract investment
Argentine president Cristina Fernandez announced on Wednesday that wellhead natural gas prices are to rise substantially from current levels, an estimated 44%, with the purpose of attracting more investments and increasing production.
Argentina which is anxious to attract private investment to bring hefty shale energy resources on stream said wellhead prices would rise to 7.50 dollars per million British Thermal Units (BTU). The current price ceiling is about 5 dollars per million BTU, although prices at the wellhead average about 2.50 per million BTU in the Neuquen basin in southern Argentina, the country's main production zone.
Lower price caps had been part of a policy of supporting local industrial energy users and keeping home bills frozen, but forced Argentina in 2011 to import 3.5 billion dollars in hydrocarbons.
“We've decided to give incentives for gas production” Cristina Fernandez said at the end of an industrial forum to which was also invited her peer from Brazil, Dilma Rousseff. She added that the new price would be available for all energy companies that invest to develop new fields in the South American nation.
The government earlier this month vowed to increase consumer prices for natural gas and electricity as state-controlled energy company YPF hopes to lure partners to invest in the Vaca Muerta shale site, which may hold enough resources to double Argentina's oil and natural gas output.
A US Department of Energy report shows Argentina holds more natural gas trapped in shale rock than in all of Europe - a 774-trillion-cubic-feet bounty that could transform the outlook for Western Hemisphere supply.
YPF and US-based Chevron Corp have already signed a deal to consider jointly exploring for shale oil and natural gas in Vaca Muerta.
“We’re developing investment projects to diversify our energy matrix”, underlined the Argentine president adding that the country can overcome its current energy deficit in the mid term, and again defended the decision to nationalize a majority stake in YPF.
“Since we’ve recovered YPF there are no more queues at gasoline stations, and this was maybe because business decisions wanted Argentina and the Argentines upset over shortages. My apologies but I have become quiet susceptible about some business decisions during my government”, said Cristina Fernandez.
“The option was quite simple: instead of spending 3.5 billion overseas, let’s invest here in Argentina and produce our own gas, we have more than sufficient”, affirmed the Argentine leader.
Suggested Stories
-
May 16th 2013
Chevron agrees to invest 1.5bn dollars in developing YPF shale field in Patagonia
-
May 18th 2013
Venezuelan oil monopoly in joint ventures with Chevron and China Petroleum
-
May 21st 2013
Falkland Islands: it’s a three-side debate; Argentina must recognize Islanders right to decide their future
-
May 21st 2013
Argentines expect inflation to average 34.9% in the next twelve months
30 comments Feed
Note: Comments do not reflect MercoPress’ opinions. They are the personal view of our users. We wish to keep this as open and unregulated as possible. However, rude or foul language, discriminative comments (based on ethnicity, religion, gender, nationality, sexual orientation or the sort), spamming or any other offensive or inappropriate behaviour will not be tolerated. Please report any inadequate posts to the editor. Comments must be in English. Thank you.
Agreed. This is a case of too little far too late.
I also think her adoring fans won't be too happy to see their fuel prices increasing at an amount way about the true inflation rate of 25%.
This could turn into a double edged sword for her. Yes, Argentina despately needs the revenue raised by its gas and oil fields, but the people of Argentina have been spoilt with extremely low fuel costs.
She should have started the price increases when she was re-elected, and gradually increased them. It wouldn't hurt the consumer too much then, as they would gradually get used to the increasing price. But to suddenly increase prices by 44%, and there is no way that these prices can't be passed on to the consumer, will no doubt see further and bigger demonstrations than occurred on 7N.
The woman is so inept...
How does that work then? Is the government going to buy it and then sell it to the people at a loss?
BK to see asslips as clever your IQ and age must be awfully confusing for you.
That was last year, this year it's three quarters of a tent that the government statisticians tells you is a tent and a half.
I think you have KFC's policy figured out.
And yes, YPE/government can sell this 'energy' temporarily at a loss, balancing the books elsewhere. Unfortunately, there are fewer and fewer places from which to balance the books.
['Temporary' means 'just before elections'.]
As it is where I live we pay almost 30% more for gas than do people living in Bs. As. and we produce 30% of the gas produced in the country!!!!
So now because CFK cannot keep up the payments to the unemployables we now will have to pay 44% more to heat our homes, thanks a lot CFK!!!!
goodnight sussie
www.gregpalast.com/the-globalizer-who-came-in-from-the-cold/
Is this is what they use to generate electricity? That would affect the cost of doing biz as well as home economics.
The other half is 35% hydroelectric (which is a very high figure in world standards), 10% nuclear, 2% geothermal, 1% wind and other.
they are not happy, and still want more.
But to live without energy is so definitely unfriendly to human beings ... like what happens to sub-Saharans when the wood/brush runs out.
Harms to the env. can be more local - eg hydroelectric, or more global - eg coal, shale oil/gas, etc ..... and the Argentinians will be helping the global destructions by favouring shale carbon over hydro-schemes.
Of course the foriegn companys will take their profits home,thats what they do! why else would they my and other shareholders capital?
Of course if you had access to capital markets you do it yourselves,but you dont,so you cant
“Argentina is drowning in gas”
Really?
Why does Argentina import 2,000,000,000 US$ worth of natural gas, if Argentina is drowning in gas?
TTT caught in a lie as usual.
Commenting for this story is now closed.
If you have a Facebook account, become a fan and comment on our Facebook Page!