What the gas producers are complaining about is the conversion of gas prices into pesos, and the fixing of them at the beginning of 2002, following the devaluation and ending of convertibility. They say that this has delayed the development of new projects.
Stats. According to the Instituto Argentino del Petróleo y el Gas, the country produced 45.87bn cubic metres of gas in 2002. In the first four months of this year production was 14.65bn cubic metres. This was, in fact, 2% more than for the same period of 2002.
Gasmen say that production will fall by 10% quite quickly unless things change. The industry said that there was unlikely to be a supply problem until 2007, but after this, unless there were new developments, output would start to fall off sharply and domestic self-sufficiency could not be guaranteed. The industry reckons that it takes a minimum of four years to find new fields and get them into production.
Some gasmen said that another problem was the fixing of the gas transport tariff. They claimed that unless this was changed the maintenance of the pipeline system could not be guaranteed.
History: Between 1991 and 2000, gas companies spent US440bn on looking for gas in Argentina. Their return on this has been pitiful: less than 7%. Each well drilled in the country costs at least US$45m. Gasmen point out that, so far, the industry has been looking for gas in mature and accessible fields. In the future it would have to move into more challenging areas, which would increase the exploration cost. To attract the investment Argentina would have to have a more market-friendly approach and a more robust legal system. Ideally the gasmen would also like tax incentives.
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