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Southern Cone and Bolivia get hit by energy crisis

June 30, 2007

Colder-than-average temperatures have boosted gas consumption in Argentina, Chile, Bolivia and in southeast Brazil. While Argentina is fighting an unsuccessful uphill battle to plug gas shortages, the biggest surprise of all is Bolivia, which announced that it has had to restrict exports to Argentina and Cuiabá in Brazil to satisfy higher demand in São Paulo and at home.

Unable to supply it domestic market, gas shortages in Argentina have had Chile especially hard. Other countries that Argentina exports piped gas to are Brazil (Uruguaiana) and Uruguay (Paysandú and Montevideo).

With Argentina and Bolivia, South America’s only gas exports struggling to meet burgeoning demand, it may well be that the Southern Cone region and Bolivia are at the doorstep of a long-term energy crisis.

With the coldest month yet to arrive in July in Southern Hemisphere winter, it’s still too early, however, to say whether supply snags in Argentina and Bolivia will be long- or medium-term. Whatever your opinion may be, it’s highly doubtful that they’re short-term.

Some analysts claim that Argentina and Bolivia need at least $3 billion apiece in investments to cope with the energy situation.

With Bolivia’s nationalization scheme having angered majors operating in the country and regulatory uncertainty continuing in Argentina, raising such sums of capital won’t be an easy task.

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