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SOUTH AMERICAN ENERGY MARKETS DAILY RONDUP (April 23, 2009): Argentine government censors eight former energy secretaries

April 23, 2009

South America Energy Markets (SAEM) publishes 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. SAEM Daily Roundup appears from Monday through Friday and is published by noon London time.

Thursday, April 23, 2009

ARGENTINA/CENSORSHIP

The Argentine government prohibited eight former energy secretaries to give a talk at the University of Buenos Aires over their concern on the country’s ever-worsening energy situation, writes Buenos Aires daily La Nacion. The former energy secretaries gave their talk at another location to a jam-packed audience. The government prohibited the talk because it considered it a political attack. The former officials, complained that the lack of a coherent energy policy by the government had led to a plunge in drilled wells (54 in 2008 versus 103 in 1988) and investments (see South American Energy Markets, April 22, 2009). COMMENT: Thanks to the government’s censorship tactics, the eight energy secretaries got more media coverage than they ever expected. It also exposes how arbitrarily the government of President Cristina Fernandez de Kirchner is handling state affairs, especially in the energy sector.

ARGENTINA/FOREIGN INVESTMENT WOES

After Argentina was crowned in the 1990s the darling of the region by multilateral organizations such as the IMF and of the foreign investment community, Telecom Italia president Gabriele Galateri di Genola did not rule out the option of abandoning Argentina, writes Buenos Aires business daily Ambito Financiero/Reuters. Citing Telecom Italia sources, Italian business daily Il Sole 24 Ore confirmed that the company is looking into the possibility of selling its 50% interest in holding company Sofora for up to €300 million. COMMENT: A great number of companies that invested and established themselves in Argentina during the 1990s would leave the country if they could. This is also the case in the energy sector. The problem is that there are not too many interested buyers these days.

ANDEAN REGION/ECONOMY

The International Monetary Fund (IMF), which lowered its growth projections for the Andean region on Wednesday, sees only the Venezuelan economy contracting this year.  Peru’s economy will show the strongest growth in 2009 and 2010, expanding by 3.5% and 2.5% , respectively, from 5.8% last year. Here are the IMF’s growth projections for the following countries:  Colombia (3.5%/1.3%), Ecuador (3%/1%), Bolivia (2.2%/2.9%), and Venezuela (-2.2%/-0.1%).  The IMF sees inflation the highest in Venezuela with 43.5% in 2009. COMMENT: Slower growth and economic prospects will impact these countries politically, especially Venezuela and Bolivia.

PERU/GAS RESERVES

(Originally published on April 22, 2009) Brazilian energy group Petrobras is quoted as saying in state-owned news agency, Andina, that it will confirm in September the discovery of new gas reserves at Block 58, located next to Camisea (Block 88), Peru’s largest gasfield. Repsol is also exploring for gas in adjacent Block 57, where 2Tcf of proved reserves were announced last year. “Petrobras is already in the process of carrying out drilling and by September we plan to confirm additional reserves of gas,” said Pedro Sanchez, Petrobras Peru general manager. COMMENT: Due to low wellhead prices oscillating between $1 and $2/MMBtu, Peru has seen gas consumption soaring. This has raised concern over whether there is enough gas to satisfy the domestic market. Peru suffered from power blackouts and bottlenecks last year due to rocketing demand.

BOLIVIA-ARGENTINA/GAS EXPORTS

(Originally published on April 22, 2009) YPFB confirmed to SAEM late-Tuesday that Argentina and Bolivia have agreed on minimum and maximum gas supplies of 4-7.7 million cu m/day during the winter months. Bolivia has also proposed set volumes of uninterruptible gas exports to Argentina but Buenos Aires has not yet responded to the offer. YPFB authorities said that the Argentine government plans to spend $960 million on the GNA gasline, which will interconnect both countries and permit greater volumes to be supplied to Argentina. COMMENT: Due to economic and political uncertainty in Bolivia, which has hit upstream investments, Argentina decided a year ago that it will seek LNG supplies and thereby try to reduce reliance on Bolivian gas. Like Brazil, energy-strapped Argentina needs Bolivian gas in the face of falling oil and gas reserves.

These briefs can be reprinted as long 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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