MercoPress. South Atlantic News Agency

“Prudence and friendly dialogue” to face energy crisis

Chile must insist in a friendly dialogue with Argentina while it strives to achieve energy autonomy because the “real truth is that Argentina is running out of natural gas”, warned Chile's former Economy and Energy minister Jorge Rodriguez Grossi.

"Chile can't be dependent on the good humour of whoever is president of Argentina. What must be done is keep a fluid dialogue while striving to achieve energy independence", said the former President Ricardo Lagos administration minister.

"We have agreements and contracts with Argentina which have not been honoured" but the "real truth is Argentina is running out of natural gas".

Almost 90% of Chile's natural gas consumption is pumped from Argentina, which also helps to generate 40% of the country's electricity making it extremely vulnerable and Argentina dependent in energy matters.

Argentine policy has been to privilege domestic consumption over exports making Chile particularly vulnerable to supply cuts.

Rodriguez Grossi said that under President Lagos the strategy applied to try and overcome the energy crisis was that of "prudence", keeping as far as possible from "any judicial litigation". "This enabled us to keep talking with Argentine authorities", he emphasized. "We're rigidly bound to Argentina regarding natural gas imports but Chile must take advantage and insist in gas provision from other sources".

Following on that line of thinking the current Chilean Minister of Energy and Mining Karen Poniachik said that "Chile is facing a challenge and not a natural gas crisis".

"We're highly vulnerable since we import three quarters of our energy needs, a situation which has worsened with supply shortages and soaring prices", admitted Ms Poniachik to a gathering of Spanish businessmen. "Promoting autonomy and diversification is the official policy".

Meantime from Buenos Aires it was confirmed that presidents Nestor Kirchner and Michelle Bachelet would be holding a private meeting to talk about natural gas in the framework of the coming Mercosur summit July 20/21 in Cordoba.

In Santiago the president of the powerful Production and Commerce Confederation Hernan Somerville said it was time to let the energy market function on its own.

"We shouldn't ask for government interventions or regulations or arbitrary prices, let the market and competition decide, which is what has made Chile prosperous", he insisted.

With prospects of an increase in imported gas prices, the Bachelet administration is asking distributors to absorb the difference and not punish consumers this winter.

"In Chile market policies, price incentives and competition have been very successful and it is precisely the lack of those competitive policies that has swept Argentina into its current energy crisis", said Somerville. "Let's celebrate that these policies at the end of the year will turn Chile into a creditor country, something unthinkable. This solid position will enable us to face any downturn or crisis in the world economy", highlighted the business leader.