MercoPress. South Atlantic News Agency

Lack of Argentine gas forces red numbers on Magallanes region

Methanex in Punta Arenas

Magallanes Region economic activity plummeted 22.7% during the last quarter of 2007 which meant the region ended the twelve month period with a surprising negative performance of 11.5%, according to the local chapter of Chile's National Statistics Institute, INE.

Gabriel Parada speaking to the press in Punta Arenas said the main negative impact in last year's fourth quarter was manufacturing, down 16.3%, particularly hard hit by the decrease in methanol production as a consequence of insufficient provision of natural gas from Argentina. Other sectors which had a poor performance include wood mills and cattle slaughtering. The most dynamic positive contribution came from fisheries, construction, services, public utilities, electricity, domestic gas supply and drinking water. But Parada also pointed out that the negative impact for Magallanes economy could be drastically reduced if methanol production was not included in the official statistics, although equally in the red: minus 2.5% in the fourth quarter and minus 2.5% for the whole of 2007. The Chilean Economy ministry representative in Magallanes Javier Solis attributed Argentina's reduced supply of natural gas for the poor performance of methanol production and anticipated that the situation "will continue in a similar trend during the first quarter of 2008, and also in the second quarter". Solis said that the methanol production shrinkage had an impact on the rest of the regional economy particularly in retailing and services, which "immediately feel the pinch". The banking sector also had a downturn and this could be explained by "a lesser interest from Punta Arenas residents in consumer credit". Regarding employment Solis described the situation as diametrically opposite and cautioned that the economic activity indexes "compare two scenarios at different time". "But the situation should begin to balance, if and when the supply of Argentina natural gas to Methanex begins to normalize", he concluded.