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Political and economic crisis throws Argentina’s energy market into disarray

October 01, 2019
Kathy Hipple and Tom Sanzillo
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Key Findings

Only two bids to export natural gas to Chile, Uruguay or Brazil were submitted since August, which represented only 20 percent of the government’s plan to export 10 million cubic meters per day.

ExxonMobil, Total, and Wintershall were granted permits to export gas to Chile, but did not submit applications.

Natural gas production, though below plan, has created a glut. Production of natural gas has increased 5% in 2018 and even more in the first several months of 2019, largely fueled by fracking in Vaca Muerta.

Executive Summary

Argentina’s already distressed energy market achieved a new level of disarray when President Mauricio Macri lost his primary bid for reelection. Producers are indicating they have slammed on the brakes on their investments in Vaca Muerta, located in Argentina’s northern Patagonia, until after the October 27 presidential elections. Oil and gas companies blame shifting energy policies, currency controls, price freezes and inadequate infrastructure. For Argentine consumers, government measures to subsidize energy prices have not kept pace with inflation that now exceeds 50 percent. Despite a glut of natural gas, largely from the growth of unconventional production (fracking) in Vaca Muerta, Argentines are not enjoying low gas prices and other benefits.

Please view full report PDF for references and sources.

Press release: IEEFA brief: Political and economic crisis throws Argentina’s energy market into disarray

Kathy Hipple

Former IEEFA Financial Analyst Kathy Hipple is a founding partner of Noosphere Marketing and the finance professor at Bard’s MBA for Sustainability. She worked for 10 years with international institutional clients at Merrill Lynch and then served as CEO of Ambassador Media.

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Tom Sanzillo

Tom Sanzillo is Director of Financial Analysis for IEEFA. He has produced influential studies on the oil, gas, petrochemical and coal sectors in the U.S. and internationally, including company and credit analyses, facility development, oil and gas reserves, stock and commodity market analysis, and public and private financial structures. He also examines such areas as community and shareholder activism, institutional investment, public subsidies and Puerto Rico’s energy economics.

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