MercoPress. South Atlantic News Agency

Energy crisis makes Argentina rationalize gas exports.

The Argentine government decided Thursday evening to rationalize natural gas exports to ensure domestic market supply, according to official sources in Buenos Aires.

Resolution 265 restricting gas exports was signed by Energy Secretary Daniel Cameron hours after President Nestor Kirchner warned that the Argentine government "will resort to all possible elements to ensure that the companies involved assume their full responsibilities". Spokespersons from the Argentine Federal Planning Office announced "there would be no natural gas rates increase".

The resolution entitles Fuel Undersecretary Cristian Folgar to design a "rationalization plan" with the purpose of avoiding provision shortages that could lead to power failures or compulsory electricity cuts.

The plan anticipates a system of cuts in gas export volumes and in gas for generating electricity exports which will be injected "in the necessary quantities", to supply the domestic market. The resolution allegedly "subordinates" exports to domestic legislation.

According to the Energy Secretariat Argentine domestic demand faces a shortage of five million cubic meters of natural gas. The rationalization plan anticipates energy supply restrictions from 08:00 in the morning to 18:00 hours in the evening, beginning this Monday.

The export markets which will be most affected are Uruguay and particularly Chile that has a long term agreement covering 35% of the country's natural gas supply mainly for electricity generation..

However in spite of President Kirchner's strong stand blaming lack of investments by public utilities companies for the shortage and "promising not to yield to any pressure no matter how strong it is", Economy Minister Roberto Lavagna admitted the country faces an energy crisis and rate adjustments are needed for electricity and natural gas.

"Nobody likes raising rates, but economic growth will be very strong this year and we need to find a solution to the energy crisis problem", said Mr. Lavagna during a popular midday television program. "There have been delays and discussions on whether to increase or not that have lasted more than what is convenient", admitted Mr. Lavagna adding that companies don't invest unless it's profitable, "so we're in an emergency".

Further on Mr. Lavagna pointed out that public utility companies haven't been investing since 1997.

However, "Brazil will sell us energy and we'll have to make savings", Mr. Lavagna anticipated but stressing that gas sales to Chile "can't be suspended because they depend on a long term contract".

Mr. Kirchner warned gas production companies that haven't invested since 1996, and invited Argentines to look back into their memories, "because many of the things happening now are the result of decisions taken yesterday; we gave up controlling privatized companies, including the gold share (of privatized YPF)".

"The hydrocarbons sector in Argentina made over 5 billion US dollars and it's time they stand up to the needs of the country", blasted President Kirchner.