MercoPress. South Atlantic News Agency

Argentina puts Punta Arenas methanol industry on the cliff

The methanol industry in the extreme south of Chile has announced it will have to appeal to redundancies and an international demand, if Argentina does not resume the supply of natural gas as stipulated in contract clauses, according to company sources.

Canadian corporation Methanex which has a huge complex a few miles from Punta Arenas and is facing growing production difficulties because of a limited provision of natural gas from neighboring Argentina has organized a contingency plan if the situation persists. Methanex Senior vicepresident for Latinamerica Paul Schiodtz admitted that redundancies and an international demand are contemplated in the plan but insisted he was hopeful about a quick resumption of the gas provision based on the recent bi-national energy committee announced by the respective presidents from Argentina and Chile, Cristina Fernandez and Michelle Bachelet. But while "negotiations prosper to ensure a sustained future gas supply, no actions will be taken". Furthermore "we trust that in the framework of this commission we can ensure a stable gas provision for our complex in Magallanes Region". Schiodtz added that in the same way Methanex has helped in looking for gas in the extreme south of Chile "we have expressed to the Argentine government our willingness to help find solutions to their energy requirements". Methanex officials in Punta Arenas have revealed the company is undergoing a dramatic situation after seven months of virtually no gas supply from Argentina. "The complex is working at 25/30% capacity which is critical for operational sustainability". According to the company's plans Argentina is supposed to supply 60% of the complex consumption and the remaining 40% by Enap (Chile's government owned oil corporation) and Geo Park. "All our staff and personnel are well aware of the situation, we've informed regional and national authorities and we must admit we've always had a positive reply, however there's not much more that can be done without Argentina", besides the fact that the situation has had a "negative impact for the regional economy", said Schiodtz. But Methanex has not remained idle: they have signed an agreement with GeoPark to help them increase production so by the end of next year they can supply 10% of natural gas demand. Methanex has also openly supported the recent opening of Magallanes and Tierra del Fuego for oil and gas licensing. However from Santiago, the financial press reports that if the situation persists Methanex is prepared to cut jobs and present a claim against Argentina before the World Bank's International Centre for Settlement of Investment disputes.