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Are energy shortages threatening to kill economic growth?

June 21, 2007

While Argentina started to scale back gas exports to Chile in 2004, cutbacks have worsened. This year has proved the worst ever that Chile has faced with respect to gas shortages.

Even Bolivia, the country with the second-biggest gas reserves in the Americas after the US and Venezuela, is feeling the pinch of shortages as well. La Paz daily La Razón reported June 19 that Bolivia has had to limit exports to Argentina and Cuiabá in Brazil to keep up with rising demand at home and southwest Brazil.

Consumption in Bolivia is reported to have risen to 6 million cu m/d from 4 million cu m/d and in southwest Brazil to 28.5 million cu m/d from 26 million cu m/d.

Paraguay’s Petropar, the state-owned energy company, has turned to Bolivia to seek LPG (liquified petroleum gas) after Argentina has curtailed such exports to the country. State-held energy group ANCAP said that LPG consumption in Uruguay has soared by 70% versus 2006.

In the face of falling investments in upstream and gas/power infrastructure projects in key energy countries like Argentina and Bolivia, is the Southern Cone region and Bolivia on the verge of a longer-than-expected energy crunch that will jeopardize economic growth?

Such a scenario looks probable now.


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