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SOUTH AMERICAN ENERGY MARKETS DAILY ROUNDUP (May 8, 2009): Oil workers’ strike in Argentina halts all gas exports to central Chile

May 8, 2009

South American 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.

Friday, May 8, 2009


An oil workers strike in Argentina has caused gas supplies to central Chileto be halted altogether from Thursday, writes Santiago daily El Mercrurio. Chilean energy officials are hopeful that gas supplies from Argentina will be resume on Friday or Saturday. Gas supplies to central Chile on April 7 from Argentina were down 89% to -9.3 million cu m/day, according to the latest data supplied by energy regulator CNE. COMMENT: The good news is that Chile will inaugurate in June the Quintero regasification plant. The bad news is that dry gas supplies to the country from Argentina will worsen, especially during the critical winter months. 


CDS Oil & Gas, which has been prospecting for hydrocarbons in far-flung western Paraguay, announced the discovery of 243 million barrels of oil and 161 billion cu ft of non-associated gas. The London-based investment fund has been exploring for oil and gas in Paraguay since 2005. The gas reserves in the Gabino Mendoza block form part of the gas-rich San Alberto reservoir in Bolivia. COMMENT: Gas will be more difficult for hydrocarbons-poor Paraguay to develop than oil. Sizeable infrastructure investments are needed to bring the gas from Gabino Mendoza to cities such as Asuncion and Vallemi. Oil will help the country reduce its 100% reliance on imports.


(Originally published on May 7, 2009) Just like Brazil announced this week (see South American Energy Markets Daily Roundup, May 5, 2009), Argentina has also raised gas imports from Bolivia to 7 million cu m/day from an average of 4 million cu m/day, reports Salta-based daily El Tribuno. Argentina was purchasing a few months ago an average of 1.8 million cu m/day from its northern neighbor. YPFB president, Carlos Villegas, said that gas exports to Brazil have risen to 24 million cu m/day from 18 million cu m/day. COMMENT:  The announcement by Argentina and Brazil comes as a lifesaver to the Bolivian government. Gas accounts for about half of the countries export earnings.  Even so, the plunge in global energy prices will mean mean that Bolivia will generate about half this year of the $3.2 billion gas-export revenues it received in 2008.


(Originally published on May 7, 2009) Due to the new constitution (CPE), which was approved in January by a nationwide referendum, Bolivia will restructure its regulatory agencies such as the one that oversees the hydrocarbons sector. Bolivian industrial association CNI expressed concern recently about the situation, writes La Paz daily La Prensa.  “…until now we do not know if there will exist another regulatory scheme, nor how it will function in the country’s energy sector,” said Daniel Sanchez, CNI president. “Industry is dependent on the availability and continuity of energy [supplies and] for this reason we are worried about the future…” COMMENT:  One of the consequences of the nationalization of the hydrocarbons sector in 2006 has been regulatory uncertainty. As long as steps by the government cause greater confusion on this front, energy companies will be less inclined to invest in the upstream sector. Bolivia drilled in 2008 only three exploratory and production wells. 


(Originally published on May 7, 2009) YPFB president Carlos Villegas said that the at the end of May the long-awaited expansion of the Gasoducto Carrasco-Cochabamba gasline will be finished, reports state-owned news agency ABI. The pipeline will raise gas supplies to 22 million cu ft/day from 18 million cu ft/day for industries in Cochabamba and La Paz. The project has cost YPFB $170 million. The pipeline has a throughput capacity to 95 million cu ft/day. COMMENT: Bolivia’s domestic consumption in March was a mere 5.61 million cu m/day, down from 6.12 million cu m/day in December. Infrastructure projects are needed to increase gas supplies for sectors such as industry. Taking into account YPFB’s problems, the million-dollar question is if the state-owned energy company has the resources to increase burgeoning demand in the country.  


In a brief published yester day on rocketing demand and cheap wellhead prices Peru, SAEM had the opportunity to speak to an analyst in Lima on the gas situation in the country. One of the points that Wiston Peña of Macroconsult made was that — contrary to media reports —  Peru has enough gas to supply the domestic market during the next 20 years. “The problem is not that we do not have [enough] gas [reserves],” he said. “The issue at hand is gas infrastrcture [to supply the market from the Camisea fields].” When Pluspetrol, the operator of the Camisea upstream project, came to Peru in 2000 there did not exist a gas market. “Gas had to be cheaper than coal [in generating electricity],” he said. During 2004-08, gas consumption in Peru has rocketed by 40%. Expanding gas infrastrcture does not only mean raising the throughput capacity of the Camisea-Lima pipeline, but raising the capacity of the gas-fractioning plant at Malvinas (Camisea) and the pipeline that transports gas liquids to the processing plant in Pisco. He agrees that one way to curb consumption  is to raise cheap $1-$2/ million BTU wellhead prices. 

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