Sunday, February 24, 2008

Argentina Natural Gas Problem Still Long Term Issue

The presidents of Argentina, Brazil and Bolivia failed to resolve a natural gas dispute Saturday, but agreed to study how to divide Bolivian supplies to avoid an energy crunch, an official said.

Bolivian Energy Minister Carlos Villegas said the three leaders amicably discussed ways to divide up limited Bolivian supplies, but reached no immediate solution during talks at Argentine President Cristina Fernandez's suburban residence.

"We need to assure the overall supply of energy for the long term," Villegas said after Fernandez met Bolivia's Evo Morales and Brazil's Luiz Inacio Lula da Silva.

He said they agreed to create a committee made up of the three energy ministers "that is going study the structural issue of gas supplies in moments of greatest demand."

He said the ministers would meet in "coming weeks." The presidents made no public comments upon leaving the talks. But Argentine Foreign Minister Jorge Taiana released a statement confirming the creation of a "coordinating group" of energy ministers that said it will permanently analize "the evolution of the respective energy demands."

Bolivian officials have assured the two energy-hungry neighbors they can meet needs this year, but growing demand for gas could mean shortages in 2009. Natural gas is a critical energy source for Brazil and Argentina.

Brazil gets about half its natural gas from Bolivia — between 27 million and 29 million cubic meters daily — while Argentine generally buys between 3 million and 5 million cubic meters each day.

Bolivian officials say they expect demand from both countries to jump by as much as 7 million cubic meters daily in 2009.

Bolivia's natural gas industry, suffering from tepid foreign investment following Morales' 2006 nationalization, will be hard-pressed to match the increase and that has raised fears of shortages.

Argentina last year signed a contract with Bolivia to dramatically expand the amount of gas it will import and the two countries are moving forward on a $1.9 billion pipeline to quadruple the daily capacity of gas exports.

The threat of future energy shortages is a headache especially for Argentina, where bitter cold last winter led to natural gas shortages as Argentines turned up gas heaters.

The country also weathered summer blackouts caused by heavy air conditioner use.

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