MercoPress. South Atlantic News Agency

Chile's gas crisis intensifies

Chile is looking to acquire Uruguay's unused natural gas permits with Argentina in order to secure a steady supply of gas for Santiago. This proposal comes on the heels of an intensifying energy crisis, with the country's capital city facing possible residential and commercial gas cuts.

In August, Metrogas' biggest natural gas export contract with Argentina's Consorcio Sierra Chata will end. It stipulated that Argentina is to supply Metrogas with 1.8 million cubic meters of natural gas daily. But with this contract no longer in effect, the only secure gas supplies for Santiago will be the 750,000 cubic meters cubed supplied by oil company Total. In the winter months, however, Santiaginos consume 1.5 million cubic meters of gas per day. Chile is dependent on Argentina for almost 80 percent of its supply of natural gas, a fuel which has been strongly promoted by Chilean authorities to help combat the ever increasing pollution in metropolitan Santiago. Chile hopes to gain access to Uruguay's unused natural gas contracts. According La Tercera, however, Argentine President Nestor Kirchner is unenthusiastic about allowing Chile to redirect Argentine gas from Uruguay back through Argentina and into Chile. For several years now, particularly since Kirchner took office, Argentina has privileged domestic demand over exports in peak consumption winter months and has prevented new contracts with Chile's gas suppliers to be brokered. Allowing Chile access to Uruguay's unused gas supply would undermine Kirchner's policy â€" one favorable to Argentines during an election year. Another solution would be for Argentina to allow an extention of Metrogas' contract with Consorcio Sierra Chata through mid-2009, when Santiago's new liquefied natural gas reserve plant is expected to be operating. This proposal, however, contradicts current Argentine policy, so Chile is likely to find itself at the mercy of Argentina's high internal gas consumption and low supplies during June and July. To date, Argentina has supplied Chile with 26% less natural gas than in 2006. Uruguay signaled that it is open to negotiations with Chile. The Santiago Times