Buenos Aires (Platts)--13Jul2010/553 pm EDT/2153 GMTAs Argentina suffers its tightest natural gas shortages this year as a
cold spell jacks up heating demand, the federal gas agency said Tuesday that
cuts to industrial users were to be expected under certain interruptible
contracts.
Enargas said distribution and transport networks are "functioning as
planned" even as the cold spell tightens the availability of supplies.
It said supplies "are totally guaranteed" for households and motorists
that use it as a fuel in its compressed form, known as CNG, according to a
statement published by the state newswire Telam.
Enargas added gas restrictions are only for companies with interruptible
contracts, which some industrial users opt to enter into because the cost is
less for supplies. But when residential demand rises, these are the first
contracts to suffer reductions in deliveries.
These cuts "are planned" and will remain in place until temperatures
rise, Enargas said.
The regulator said industrial users with non-interruptible contracts are
receiving adequate supplies.
"It shouldnt come as a surprise the measures that have been taken to
safeguard residential users," it said.
The regulator added that most companies can use alternatives like diesel
and fuel oil like in previous years.
"A number of factories have reduced output or halted operations
because of the lack of gas," said a source at the chapter of the
Argentine Industrial Union (UIA) in the western province of Mendoza.
"A glass producer has been hit very hard," the source said on condition
of anonymity.
Temperatures dropped as low as 0.3 C (32.5 F) on Monday, driving up
heating demand for gas as the brunt of the Southern Hemisphere winter hits.
WEAKER GAS PRESSURE FELT IN SOME RESIDENTIAL AREAS
The deficit is running at between 11.7 million cu m/d and 24.6 million cu
m/d of the average demand of 120 million cu m/d, according to the latest
numbers from Enargas, the federal gas regulator.
The cold spell is expected to last through the weekend, and this is
promoting authorities to order cuts to factories and power plants to ensure
sufficient supplies for homes, which by law have priority over gas supplies.
Argentina has been suffering gas deficits at times of peak winter demand
since 2004, a response to dwindling reserves and falling output. Production of
gas, which meets more than half of national energy needs, is down by more than
11% to 127.1 million cu m/d from a peak of 143.1 million cu m/d in 2004, and
proven reserves slumped by 44% between 2002 and 2008, according to the latest
industry and government data.
"There are limits in gas supplies to factories, which are having to
burn diesel and fuel oil instead," said Alejandro Albanese, an energy
expert at the Institute of Strategic Planning, a research group in Buenos
Aires.
But, not all companies can burn liquid fuels. Instead they must stop for
maintenance, said the source at the UIA's Mendoza chapter. "We are
concerned that there may be a cut in deliveries of gas to thermal power
plants, which could led to power shortages."
A number of thermal power plants, including one in Mendoza, are only
equipped to run on gas, which was in ample supplies when they were built in
the 1990s, the source said.
Residential users, at the same time, are suffering a decline in gas
pressure, said Federico Mac Dougall, an economist and energy expert at the
University of Belgrano in Buenos Aires.
"Homes are colder than usual because of very low gas pressure," he said.
The government is taking steps to beef up supplies by importing 5 million
to 7 million cu m/d of Bolivian gas and the equivalent of 8 million cu m/d of
LNG. It also is stepping up diesel imports and bringing in more supplies of
gas over the extension of a pipeline between the mainland and Tierra del
Fuego, the most southern province.
"The government is going to do everything it can to get through this
week without any cuts in supplies to homes," said Mac Dougall. "It will cut
deliveries to industry as much as is needed until temperatures rise again and
gas consumption declines."
--Charles Newbery, This e-mail address is being protected from spambots. You need JavaScript enabled to view it
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