MercoPress. South Atlantic News Agency

Argentine industry faces blackouts and more to come

Argentina again faces a winter shortage of energy and has been forced to cut the provision of natural gas to 300 manufacturing establishments given the rise in domestic consumption of fuel for home heating.

As has happened since 2004, rationing first applies to those companies that don't have supply contracts and can be interrupted several days a year according to sources from the Argentine energy sector in Buenos Aires. The same sources confirmed that supply of natural gas to Chile has also been constricted to the lowest possible. Apparently the shortage has been greater than expected because of an ongoing labor conflict in the province of Santa Cruz, extreme south of Argentina where production has been cut to 2.5 million cubic meters per day, half the normal supply. Furthermore Bolivia is also pumping below what was agreed and contracted by Argentina, which was seven million cubic meters per day. Argentina has also reduced environment protection regulations to enable the import of heavy oil from Venezuela, cutting on gas provision to industry, and thus privileging home consumption in urban areas during the peak cold temperatures period. Last winter, at the worst moment over 3.000 industrial establishments had to cut production during a week, approximately, and gasoline stations suffered long queues triggering protests from taxis and freight companies. According to industry sources the Argentine gas pipeline web has a transport capacity of 130 million cubic meters per day, but also faces a 20 million deficit. To make things worse the lack of sufficient rainfall has limited hydro electricity production, particularly the Salto Grande dam shared with Uruguay. In a recent visit to Brazil Argentina managed to convince the Lula de Silva administration to sell them 800 MW which could be increased to 1.500 MW at emergency situations and if the supplier has a reasonable surplus. Energy industry sources indicate that Argentina's deficit has two main sources: the spectacular recovery of the economy at a sustained average 8.5% growth rate during the last five years and lack of insufficient incentives and investment for oil and gas exploration and extraction. This has become particularly severe since 2004 when the first shortages became evident but the Kirchner administration refused to let local energy follow international prices, fearing a slowdown, but generating the current situation.