anouk honore gas research programme anouk.honore@oxfordenergy… · 2011-05-04 · oxford institute...
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Argentina 2004: A Gas Crisis ?
Anouk HonoreGas Research Programme
[email protected]/gasprog.shtml
OIES Seminar June 29, 2004
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June 29, 2004 Anouk Honore / OIES Seminar
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S Outline
• Introduction• Origins of the current crisis• Response of the government: back to state
intervention• Set back in the Southern Cone energy
integration ?• Conclusions
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June 29, 2004 Anouk Honore / OIES Seminar
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S 1. Introduction
• The Argentine gas market
• The natural gas deregulation and privatization reforms of the 1990s
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June 29, 2004 Anouk Honore / OIES Seminar
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S Argentina
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S Gas reserves
• Abundant proven reserves
• 778 bcm in 2001 • 11% of Latin America• 19 sedimentary basins• E&P in only 5 • Potential for additional
reserves to be discovered
Map: International Energy Agency
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June 29, 2004 Anouk Honore / OIES Seminar
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S Gas production and demand
05
1015202530354045
198019841988199219962000
bcm
Production Consumption Source: International Energy Agency
• In 2002:• Production: 39 bcm• Demand: 34.3 bcm• R/P ratio: 19 years• Share TPES: 49.3% • Share TFC: 36.4%
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S Gas demand by sector
• Industry 34.7%• Power 28%• Residential 22.4%• Transport 8.6%• Commercial 3.3%
-------------------------• Exports: 15%
05
101520253035
1993 2003bc
m
Power IndustryResidential TransportCommercial
Source: Enargas
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SMap: International Energy Agency
Gas market
• Fully privatized• Well-developed
• Upstream: high concentration
• Midstream: TGN & TGS• Downstream:
8 companies
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June 29, 2004 Anouk Honore / OIES Seminar
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S 1990s reforms in the gas market
• Deregulation and privatization• YPF => Repsol YPF• 1992: Natural Gas Act
– GdE => 10 companies– Enargas– Unbundling– TPA– Removal of wellhead and wholesale price controls– Definition of eligible customers
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S Impacts of the reforms• Investment• Liberalization of gas market• BUT:
– No fresh exploration– No major investment in network
infrastructure
+ 92%+ 62%Consumption+ 106%+ 99%Production
1990-19801990-2000
Source: International Energy Agency
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S 2. Origins of 2004 gas crisis:Economic and financial crisis since 1990s
• The 2001-2002 financial crisis
• Contributory factors
• 2004 events: a gas crisis ?
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S Back to the 1990s reforms
• 1990s: Austerity measures + liberalization• 1991 : Convertibility Law & Currency Board=>1994: Return of GDP growth and low inflation
BUT:• Fail to tackle fiscal problem => debt increase• Overvaluation of exchange rate⇒1998: prolonged recession⇒ 2001-2002: financial crisis
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S December 2001- January 2002
• Dec. 2001: default on US$155 bn debt
• Jan. 2002: Public Emergency Law– Freeze on bank deposits– Abandon of the currency board– Devaluation of the peso
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SImpacts of the 2001-2002 financial
crisis on the energy sector
• Restrictions on bank accounts withdrawal and transfer of money abroad
• Peso devaluation by 65%– Lower value of bank deposits in US$– Distribution companies: high financial losses
0.401.15Industry0.661.88Residential20022001Wholesale prices US$/MBtu
Source: International Energy Agency
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SFreeze on tariffs:
wrong market signals• Further revenue losses• Low investments in E&P and in
transmission network• Increase in demand
+ 19%Q1 2003 – Q1 2004+ 10%2002-2003- 3%2001-2002- 8%2000-2001
GrowthPeriod
Source:Enargas
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S Contributory factors
• Seasonality of the demandTotalPowerIndustryResidential(2003)
1003,150.821662.127851.836,41,148.2July
1001,91932,1616.641,8801.511,3216.5January
%mcm%mcm%mcm%mcm
Source:Enargas
• Dry year
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S 2004 events: a gas crisis ?• Gas shortages• Power cuts and voltage lowered• Reduction of gas and power exports
What went wrong?• 1990s reforms => overvaluation & foreign
debt => 2001-2002 crisis => Public Emergency Law => 2004 crisis
• Economic crisis > energy crisis
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S 3. Response of the government: back to state intervention
• Greater state intervention
• Gas prices hikes
• Enarsa: a new YPF?
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S Greater state intervention
• National Energy Plan 2004-2008
• Gas prices hikes
• Creation of Enarsa
• Resolution 265
• Creation of trust fund
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SNational Energy Plan
2004-2008• US$3.85bn investment program• Natural gas transportation
(+55 mcm/d capacity by 2007)• Power transmission• Power generation (better energy mix)• Gas-use rationalization plan• Emergency gas and power imports
• Biggest challenge: how to secure the financing ?
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S Gas prices hikes
• Agreement April 2004
• Increase wellhead gas prices in stages to US$1/MBtu– July 2005: Industry, power plants and CNG – December 2006: Households
• Popular discontent
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S Enarsa: a new YPF?
• New state-owned company• Help secure investment in E&P• But: no assets and lack of capital
• Key question: how will it be financed ?
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June 29, 2004 Anouk Honore / OIES Seminar
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S Kirchner measures: appropriate answer or political response ?
• Time to take actions to attract investment• 1990s economic and/or gas deregulation:
too far too fast ?• New solutions needed • Greater state intervention may be one• Take care of investors’ rights
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4. Argentine crisis: a set back in the Southern Cone energy integration ?
• Political tensions
• New markets / energy agreements
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S Chile• 100% dependent on Argentine gas• Cut in gas exports up to 47%
• Power cuts• Switching to other fuel => expensive• Better diversification: hydro, coal for power and
LNG imports => medium – long-tem measures
• Diplomatic tensions on the short term
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S Uruguay
• 1/5 electricity comes from Argentina • Cut in power exports
• Imports from Brazil
• Diplomatic tensions on the short term
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S Bolivia• Imports of 4 mcm/d of gas from Bolivia• Initial period of 6 months• Higher price than domestic price
• Short-term relief for Argentina• Revenues for Bolivia
• 20 mcm/d from 2006?
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S Brazil
• Power imports from Brazil on an interruptible basis
• From June to August 2004
• Higher price than domestic price
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June 29, 2004 Anouk Honore / OIES Seminar
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S Venezuela
• Food for fuel deal: swap gasoil and fuel oil against food and agricultural products
• Triangular relation with Brazil
• High price for Argentina
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June 29, 2004 Anouk Honore / OIES Seminar
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S A set back in energy integration ?
• Argentine crisis is spreading,reflecting energy integration
• Gas and power trans-border interconnections helped alleviate crisis
• Conclusion of Argentine crisis: even greater integration needed in the Southern Cone
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S Conclusions
• 2004 Argentine crisis: economic vs energy crisis
• Kirchner’s measures: good or wrong ?
• What lessons ?
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June 29, 2004 Anouk Honore / OIES Seminar
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S Thank you