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Argentina cuts gas supplies to Chile

June 5, 2007

Colder-than-average temperatures was the main factor that forced gas-strapped
Argentina to scale back gas supplies along the 467km GasAndes pipeline to central Chile on May 28 for several days, according to Chilean energy regulator CNE. This latest cutback to Chile’s most populous region is a worrying sign.

A Chilean gas company source said that this May had most likely been the worst month since Argentina started to scale back supplies in 2004.

Gas supplies along the GasAndes line suffered severe cutbacks in mid-May. On May 14 they fell by 9.78 million cu m/d (a reduction of 97%), May 15 by 10.10 million cu m/d (-100%) and May 16 by 9.89 million cu m/d (-98%), according to CNE. On November 15-16 Argentina halted completely gas exports to central Chile.

Chile’s energy minister Marcelo Tokman said that gas supplies from Argentina would resume from May 30 and that the ongoing cuts would not affect household and commercial establishments.
In Argentina, the dire gas situation has forced Argentina’s two largest gas distributors Metrogas and GasNatural BAN to restrict interruptible gas supply agreements with industry, transport and large commercial establishments.

Looking for a solution, Chile is reported to have turned to Uruguay’s UTE to purchase gas that the state-owned power company does not take from Argentina. But this will be limited in its practicality since the tiny South American country imported in December last year a
paltry 10.05 million cu m from Argentina, according to the latest figures supplied by the Uruguayan industry ministry.

Chile has turned to Brazil as well and has signed energy cooperation agreements between Enap, the Chilean state-held energy company, and Petrobras to explore for hydrocarbons in the country and abroad.

Gas supplies in the mining region of northern Chile, which is fed by the GasAtacama and Norandino pipelines from Argentina, have also suffered.

After seeing on May 23 a decline of 1.77 million cu m/d (97%) on GasAtacama and 1.88 million cu m/d (-99%) on Norandino, the Chilean government has reiterated to mining companies in the region that they must look for energy backup solutions.

Enap president Enrique Davila has warned that gas supplies from Argentina may end altogether from 2010 and therefore Chile must lessen dependence on Argentine gas imports as soon as possible. One of the measures spearheaded by Enap to reduce dependence is a plan to move ahead with the construction of a $775-million regasification terminal at Quintero.

GasAtacama and Norandino have been studying the possibility of building a terminal in northern Chile to deal with gas shortages from Argentina. Seven gas pipelines link the two countries.

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