MercoPress. South Atlantic News Agency

Argentina's energy crisis: Chile to the rescue by 2009

Growing natural gas supply cuts to Chile because of the Argentine energy crisis have caused the Chilean economy a half point GDP loss in 2006 and so far this year losses equivalent to 307 million US dollars to the manufacturing industry.

However by 2009 the situation could have reversed to such an extent that the now rachitic flow along the trans-Andes gas pipelines could be fully bloating in opposite direction. When the energy crisis was still a distant nightmare, Argentina had a contract to supply Chile an average 22 million cubic meters of natural gas per day, but that volume in 2006 dropped to 17 million cubic meters and currently stands, following the cold spell, at 1.8 million cubic meters which only just helps guarantee residential consumption. Chilean statistics show that last February Argentine gas supply cuts averaged 47%; in March 55%; in April 60%, May 70 to 80% and in the last two weeks almost 100%, only soothed following a "political understanding" between the neighboring countries governments to avoid complications for Chilean president Michelle Bachelet. According to the Chilean Central Bank the country's GDP lost over 0.4% last year because of gas restrictions, particularly in the manufacturing sector forecasted to grow 3.8% and which had to accept a more modest 2.53%. But actually what most worries the Bachelet administration is the social and political restlessness impact of long term supply restrictions to homes. Chilean authorities when there's still a few days for the official beginning of winter, June 21, feel that the situation is "extremely delicate", and could not necessarily improve in the summer months when all air cooling systems are working at full capacity. "In Chile it's hard to understand why a significant gas supply cut could happen when residential consumption in Santiago represents but 5% of daily average consumption in metropolitan Buenos Aires", said Carlos Cortes Simon CEO of the Natural Gas Distributors Association. "Since January we've ceased to receive 1.361 million cubic meters of natural gas. This year we've suffered the largest restrictions since the crisis begun in April 2004 and now the situation is openly critical", said Cortes Simon. To compensate restrictions Chilean manufacturing industry has had to appeal to diesel oil with losses estimated in 307 million US dollars. And what about the rest of the year? "We are hopeful of the agreement reached with President Kirchner and expect to have sufficient gas to meet home and shops demand", said Cortes Simon who added he was aware the "situation will worsen before it begins improving". The good news is that as a consequence of the 2004 experience the Chilean government embarked in a huge project, with British Gas, to build a port terminal for the import and storage of natural liquid gas which should be operational for 2009. When this happens the plant will have a supply potential of 20 million cubic meters per day and since Chile demands only 6.5 million cm per day, yes you guessed correctly. The hush-hush plan is to pump and sell the excess production (over 12 million cm) to Argentina. In other words the Argentine energy crisis will be partially solved by gasless Chile.