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SOUTH AMERICAN ENERGY MARKETS DAILY ROUNDUP (April 6, 2009): Argentina extends LNG lease deal with Excelerate Energy for two years

April 6, 2009

South America Energy Markets (SAEM) will begin a daily roundup of the top-five stories affecting energy markets in the region with links. The roundup includes all the major web dailies of South America and other websites that write about the region’s energy markets. I aim to publish SAEM Daily Roundup from Monday through Friday by noon London time.

Monday, April 6, 2009

ARGENTINA/LNG IMPORTS

Owing to growing uncertainty over gas supplies from Bolivia, Excelerate Energy has entered into a two-year extension agreement with Repsol YPF to lease an LNG  regasification vessel to Argentina. State-owned Argentine energy company Enarsa had leased the vessel in 2008 to plug demand in the face of rising gas demand. The deal is a good example of the lack of trust that Argentina has in Bolivia as a gas supplier. Enarsa paid last year $17/MMBtu for leasing the floating LNG terminal at Ingeniero White, located next to Bahia Blanca. Thanks to lower energy prices, Enarsa sees leasing and LNG-fuel costs this winter at “about $14/MMBtu. ”

BOLIVIA/GAS EXPORTS

YPFB president Carlos Villegas said that Bolivia will “guarantee” gas exports to Argentina as Southern Hemisphere winter approaches, reports state-owned news agency ABI.  He said that the troubled state-owned energy company will supply its southern neighbor with “a minimum of 4 million cu m/day.”  Facing shrinking gas markets in Brazil and Argentina and lower gas prices, Bolivia finds itself in between a rock and a hard place. Last year, export earnings from gas stood at $2.980 billion. Export revenues will take a hit this year and will impact the relationship between the central government and the regions because there will be less state money to allocate.

REGIONAL/PETROBRAS LOSSES

Brazilian regional energy giant Petrobras has suffered losses of over 600 million reales ($272 million/€202 million) due to its Latin American operations, reports Hidrocarburosbolivia.com, citing Telecinco of Brazil. The lion’s share of the losses were incurred in Ecuador, where Petrobras lost 400 million reales. The energy company lost 175 million reales in Venezuela but made a profit of 66.2 million reales in Bolivia. Political risk and nationalism are at the heart of Petrobras’ losses in countries such as Ecuador and Venezuela.

ARGENTINA/REGIONAL POWER TARIFFS

Despite the recent owwer hikes ok in October by the government, Argentina continues to charge clients the cheapest electricity rates in the region for households that consume less than 650kWh in two months, reports Buenos Aires daily La Nacion. The cheapest household electricity rates in the region are offered in the Dominican Republic. Citing a study by Montamat & Asociados, La Nacion said that the cheapest power prices in Argentina were charged by Edenor and Edesur of Buenos Aires ($0.03/kWh), Epec of Cordoba at $0.07/kWh, and Epe of Santa, at $0.09/kWh. Montamat & Asociados said that tariffs for household consumers that used 600-1,200kwh in two months was $0.10-$0.11/kwh, or at the same level as Peru and Brazil. Low tariffs to households is one of the reasons why foreign companies have not invested enough in long-overdue upstream and energy infrastructure projects. Matters will get worse before they improve for foreign investment in Argentina.

PARAGUAY/POWER BLACKOUTS

Blackouts in the capital Asuncion are more the rule than the exception, even though Paraguay operates with Brazil and Argentina the Itaipu (14,000MW) and Yacyreta (1,840MW at 76 meters and 3,200MW at 83 meters) hydropower plants. Building more 500kV transmission lines would remedy Paraguay’s endemic power shortages. An article in Asuncion daily, La Nacion, revealed that in order to avoid a blackout at the wedding of the president of the house of deputies,  Salys Buzarquis, state-owned power company Ande installed a generator to light the building while 180,000 clients were without electricity on Saturday due to a storm. Some analyst believe that Paraguay should invest heavily in transmission lines to improve power security.

These briefs can be reprinted as long as as the source is cited.

If you have any feedback on today’s articles, or if there are energy industry stories you think should be covered, or need research assistance, please contact etessieri@latamreport.com.

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