Argentine Gas Distributors Cut Supplies on Cold Wave (Update3)
By Bill Faries and Eliana Raszewski
June 15 (Bloomberg) -- Argentina's two largest natural gas distributors cut off supplies to some industrial customers indefinitely as a cold wave sent temperatures plunging at the start of the Southern Hemisphere's winter.
Officials at Metrogas SA and Gas Natural BAN, both based in Buenos Aires, said they stopped gas deliveries to 158 companies in order to ensure sufficient supplies for residential users. Neither company would say when gas flows would resume. A national weather service spokesman said the temperatures are within the ``normal'' range for this time of year.
Energy shortages threaten more than four years of economic growth exceeding 8 percent in Argentina, a boom fueled by exports of commodities and industrial goods such as automobiles. A cold front at the end of May forced rolling blackouts in the capital, causing fuel shortages in South America's second- biggest economy and leading Argentina to cut natural gas shipments to Chile.
``These problems will probably get worse because of a lack of investment in the energy sector,'' said Ricardo Amorim, chief Latin American economist at WestLB AG in New York. ``This will be a serious problem in 2008 and 2009 because such investments take years to mature,'' he added.
Both companies asked the 688 gasoline stations they service in Buenos Aires to suspend until further notice sales of compressed natural gas to ensure supply for residential use.
Government price controls on the sale of energy have damped investment throughout the industry, said Matthew Festa, an economist with 4Cast Inc. in New York. Argentina hasn't allowed energy rate increases since 2002.
Colder Ahead
Metrogas is Argentina's largest natural gas distributor, providing service to 2 million customers in Buenos Aires, according to the company's Web site. Gas Natural BAN is a unit of Gas Natural SDG SA, Spain's largest gas company. The company reaches about 6 million people in Argentina.
``Industrial supplies will be cut as long as the low temperatures continue and domestic consumption remains high,'' said Betina Llapur, director of external affairs at Gas Natural BAN. ``Industries can use alternative energy such as diesel fuel or fuel oil since we are obligated to ensure supplies to residential clients,'' Llapur said in a telephone interview.
The weather service said on its Web site that temperatures in the capital will decline further in the coming days to an overnight low of 1 degree Celsius (34 degrees Farenheit).
Argentina's gross domestic product grew 8 percent in the first quarter of 2007, down from 8.8 percent in the same period a year earlier, the national statistics agency reported yesterday.
To contact the reporters on this story: Bill Faries in Buenos Aires at wfaries@bloomberg.net ; Eliana Raszewski in Buenos Aires eraszewski@bloomberg.net .
Last Updated: June 15, 2007 16:22 EDT
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