MercoPress. South Atlantic News Agency

Chilean industry stalled by Argentine gas cuts

Chile expressed Thursday deep concern to Argentina over the latest cuts in gas supply plus reports that any price increase in Bolivian gas will be passed on to Argentina's customers.

Some 360 Chilean small industries, most of them located in Santiago, were forced to temporarily halt output as Argentine gas supply cuts forced distributor Metrogas to momentarily shut off supply to many of its industrial customers. Additionally, some 100 industrial clients only received partial gas deliveries, according to the Chilean press.

Cold temperatures in Buenos Aires and increased domestic consumption have forced Argentine producers to reduce their gas exports to Chile.

"This has been happening in the past two years and will continue to occur ... especially during this time of year" said Energy and Mining Minister Karen Poniachik trying to downplay gas-cuts reports.

Nevertheless Chile sent Deputy Minister of Foreign Affairs Alberto van Klaveren to Buenos Aires "to express our concern over recent energy cuts and to have an idea of coming events", said Alejandro Foxley, Foreign Affairs minister.

The Chilean official originally was scheduled to travel to organize the agenda for the May 29 meeting of eight Argentine ministers with their Chilean counterparts in Santiago, but he was instructed to also include the gas supply issue.

Another question that has Chile nervous are the insistent rumours from Buenos Aires saying that the new gas prices currently under negotiation between with Argentina and Bolivia will be passed on to Buenos Aires clients (Chile).

"The Chilean government has received no official notification from Argentina regarding natural gas prices and selling conditions to Chile. Furthermore the Argentina-Bolivia negotiation is bilateral and Chile does not participate", pointed out Minister Poniachik.

However Argentine cabinet chief Alberto Fernandez has been quoted in the Buenos Aires press saying that President Kirchner administration is considering the option of an additional tax on gas exports to compensate higher Bolivian gas prices thus not influencing the domestic market.

Chile buys 90% of Argentina's gas exports and under normal conditions would use the fuel to generate around a third of its electricity. The restrictions have forced Chilean generators and manufacturers to use more expensive fuels, driving up energy costs