MercoPress. South Atlantic News Agency

A new government oil company is born in Argentina

The Argentine government announced this Tuesday the creation of a government energy agency to ensure the supply of gas and electricity at accessible prices for the domestic market. Argentina is currently undergoing a serious energy crisis with domestic shortages and reduced overseas sales with diplomatic consequences in the region.

"The government decided the creation of Argentina Energy S.A., Enarsa, with the purpose of participating in the hydrocarbons and energy markets through the rational exploitation of resources", said Planning Minister Julio De Vido during a press conference in Government House in Buenos Aires.

The objective of Enarsa is to ensure the availability of gas and electricity at prices compatible with the economic level of the country and "rebuild reserves, production levels, gas supplies together with infrastructure needs in the transport of gas and electricity", added Mr. De Vido.

Enarsa will be made up of 53% non transferable shares belonging to the government, 12% to the Argentine provinces and 35% will be offered to the private sector.

Enarsa that is expected to associate with private companies to explore and exploit different fuels is the first government company in the local hydrocarbons market since the Argentine government privatized YPF and Gas del Estado in the nineties.

Several private companies have anticipated they will work closely with the Argentine government in the energy emergency.

Brazilian Petrobras promised to double the transport capacity of its gas pipeline that extends 3,300 kilometres from Ushuaia in Tierra del Fuego to Buenos Aires, which means an additional 2,8 million cubic meters in 2005 and another eight million cubic meters in 2006.

Repsol-YPF also is committed to increase gas production by 9,5 million cubic meters.

Argentina has abundant reserves of natural gas but the lack of investments during several years and a booming economy have caused a bottle neck with shortages both for the domestic industrial market and overseas, mainly Chile.

"If we have an energy crisis in Argentina today, unfortunately it's because corporations have not been investing particularly since 1998", said President Nestor Kirchner.

The Kirchner administration also decided to increase taxes and retentions on hydrocarbon and fuel exports in an attempt to discourage overseas sales and ensure domestic supply.