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With Bolivian gas supplies uncertain, Argentina looking for energy

28-02-2008 - 03:40

Argentine officials, already facing an energy crisis, are scrambling to find new sources of natural gas and other energy following Bolivia's warning that it may not be able to provide all the supplies it had promised.

"If we don't have Bolivian gas, we'll have to look for alternatives," Cabinet chief Alberto Fernandez told Radio Continental on Wednesday.

Fernandez did not give a precise plan but said Argentina might import fuel oil from Venezuela, as it did in years past, or turn to bottled natural gas to ensure that consumers are able to heat their homes, cook their food and power their cars.

Argentina _ which suffered sporadic energy shortages last winter _ signed a contract in 2006 to increase the Bolivian natural gas it buys, to reach some 27.7 million cubic meters a day by 2011.

But Bolivian Vice President Alvaro Garcia recently suggested renegotiating the contract because a lack of foreign investment in exploration for new reserves has caused Bolivia to struggle to deliver the gas it promised to Argentina and other energy-hungry South American nations, such as Brazil.

"The energy problem is not just Argentina's, but the region's," Fernandez said. "It's affecting Brazil, Bolivia and Chile too."

Meeting last Saturday in Buenos Aires, Argentine President Cristina Fernandez, Brazil's Luiz Inacio Lula da Silva and Bolivia's Evo Morales failed to agree on how to divide Bolivian gas supplies.

Argentina had hoped to persuade Brazil to give up some of its quota. Silva refused, though he vowed to transfer electric power to Argentina as necessary during peak winter months.

While Bolivian gas shipments represent less than 5 percent of Argentine consumption, any sag in imports would "raise the risk of shortages" in the June-August winter because of the tightness in Argentine markets, said analyst Daniel Kerner of the New York-based economic consulting firm Eurasia Group.

Problems with Bolivian gas imports could have a ripple effect, forcing Argentina to use more of its own production in the southern part of the country and shut off some exports to Chile, as it did last year.

Meanwhile officials in Chile, where energy prices have skyrocketed in recent weeks, are trying to reduce dependence on Argentina.

A 2002 financial meltdown led Argentina to freeze most consumer utilities rates at devalued peso prices _ leaving energy companies strapped for cash and discouraging investment, even as energy demand soared with the strong economic rebound that followed.

Since 2004, Argentina has been hit by occasional but increasingly severe shortages of gas that last winter briefly idled some gas-powered factories and taxi fleets.

Many critics fear the looming cold months could bring an even worse problems if there is a repeat of last year's unusually harsh weather that brought Buenos Aires its first snowfall in decades.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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