MercoPress. South Atlantic News Agency

Argentina pretends 50% hike in gas price sale to Chile

Argentina's natural gas exports to Chile will be taxed and twelve different formulas to calculate the new range of prices were handed to Chile's Energy and Mining Minister Karen Poniachik.

Energy officials from both countries met Friday in Buenos Aires to discuss the energy scenario which Ms Poniachik admitted will mean an increase for Chilean consumers "although the purpose of the talks is to minimize the hike".

A new meeting is scheduled for next week in Santiago.

Argentina's decision follows the signing of a supply agreement with Bolivia which increases the price of natural gas pumped to Buenos Aires in 50%.

On signing the agreement, President Nestor Kirchner promised Argentine consumers that the cost hike would not be included in the gas bills and therefore the need for an export tax to avoid Enarsa, the country's government owned energy company from having to absorb the losses.

Chile is highly dependent on natural gas from Argentina which supplies between 13 and 15 million cubic metres per day and is the main energy source for domestic consumers and most of metropolitan Santiago industries.

Last June Chile suffered two major unexpected gas "blackouts" when Argentina cut off exports to its neighbour and favoured the domestic market.

Chilean officials travelled to Buenos Aires hoping for a "political gesture" from the Argentine administration, basically assurances of a non interruption in the supply of natural gas as has happened for several years running, and that the impact of the new price is minimal.

"We would like to see a political gesture taking into account the excellent level of bilateral relations, but we're not going to Buenos Aires be notified?" said Chilean government sources in Santiago.

"We are well aware that the Buenos Aires meeting was not definitive, time is running short but we're working out options", said Ms Poniachick.

However the situation is sufficiently serious as to have President Michelle Bachelet publicly reassure that the supply of Argentine gas had been confirmed, particularly following the agreement President Kirchner signed with Bolivian Evo Morales.

"I want to reassure you that homes, stores, workshops will not be short of gas", said Ms Bachelet.

Earlier in the day opposition members warned that in the event of an increase in the price of natural gas from Argentina, home bills will be "jumping 56%".

"According to contracts Argentina must supply Chile 25 million cubic metres of natural gas per day, five million of which for Methanex in Punta Arenas. But Chile is only receiving between 10 to 15 million cubic metres per day", said Deputies Julio Dittborn and Ivan Moreira from the opposition UDI.

"Argentina and Bolivia have agreed to increase the price of natural gas 56% beginning July 15 by 56%. This involves the 7.7 million cubic metres Bolivia pumps daily to Argentina", added the Deputies.

"Therefore we shouldn't be surprised if gas bills in Chile are hiked 56%".