MercoPress. South Atlantic News Agency

Chile will change energy dependency.

Surprised by the seriousness of the Argentine natural gas crisis the Chilean government announced drastic changes in its energy policy which until now was increasingly dependent on imports from Argentina.

Chilean Minister of Economy and Energy Jorge Rodríguez made the announcement after returning from Buenos Aires where he met with Argentine officials and was informed of the situation. The coming week Argentina is expected to begin rationing electricity and imposing significant cuts to natural gas exports, mainly to Chile and Uruguay.

Mr. Rodríguez revealed that Chile had privileged natural gas as the main electricity source given its relatively low cost, lesser contamination and abundance in neighbouring Argentina. Natural gas currently represents 18% of Chile's energy matrix and was forecasted to expand to 33% by 2008.

"The emphasis from now on will be in hydroelectricity, geothermal and aeolic energy plus coal, resources which are currently lagging because of the priority given to natural gas", admitted Mr. Rodriguez.

According to the Chilean press, Mr. Rodríguez announcement partly contradicts president Ricardo Lagos' optimism after a long conversation on the issue with his Argentine counterpart, Nestor Kirchner.

However members of the Lagos delegation that returned from a two days visit to Magallanes Region privately admitted that Argentina's energy crisis and natural gas export restrictions came as "a cold shower".

Mr. Rodriguez is scheduled to hold further talks in Buenos Aires April 1 and 2, but it seems almost certain that Argentina will be reducing natural gas sales to Chile 5 to 6 million cubic metres per day, equivalent to 30% of the 18 million cubic metres currently contracted. This represents almost 40% of Chilean electricity generation.

President Kirchner last week signed a decree giving priority to Argentine domestic production and limiting surplus sales.