Daily Archives: July 23, 2014

Will Argentina stop paying for our gas, one more time?!

Carlos Miranda writes in Pagina Siete:


Good buyer, but bad payer

Argentina was our first buyer of natural gas in large volumes and for long-term.

Carlos MirandaYPFB inherited that contract with fixed prices. As soon took over that condition changed. Argentina refused to agree on a formula for automatic settings. They preferred to have quarterly meetings to this effect.

This apparent impasse, invariably ended with a phone call from the Casa Rosada to the Palacio Quemado.

They remembered returning reasonable prices and friendly atmosphere in the contract, generating revenues that were called “the salary of Bolivia”, a situation which was abruptly interrupted by the advent of democracy in both countries.

La Argentina was too hard on the fledgling Bolivian democracy. They rejected the regular meetings and stopped to pay the bills for gas. This lack of payments was devastating to our economy, because it was one of the main factors that burned our economy and created one of the biggest hyperinflation in the history of mankind.

After a long struggle to solve the debt agreed by a financial transaction called “Clean Slate”, which consisted of the exchange of long-term Bolivian liability notes against current bills for gas deliveries. The adjustments in the change of documents, Argentina made it ​​with the unhelpful delivery of agricultural machinery.

We currently export gas to Argentina in increasing volumes that after 2020 will be greater than 30 million m3 / d. The operation is governed by two contracts with the company Energía Argentina SA (ENARSA): one of strong volumes, growing and programmable (80%) and the other by variables, interruptible volumes (20%).

The contract for firm volumes, the late payment of invoices is sanctioned with interest on the unpaid amounts. This penalty does not prevent the recurrence of a “Clean Slate”, although payments are accompanied by financial documents of the first order.

Argentina is not cheating when they pay with impeccable financial documents. The problem is that it does not fall behind in making those payments. The contract includes variable volumes outage for nonpayment of bills.

So far, ENARSA has a three-month delay for payment of gas imported from Bolivia. As the volumes and prices are three times higher than in 1970, the debt must be considerably higher than the $400 million.

So concerned about the payment schedule of Argentina. For a couple of months ago, the Argentine government has been clear that the country was heading for a “total collapse” as a result of the default of 2001.

The government of Mrs. Kirchner has agreed payments with Repsol, others with the Paris Club, and some arbitration decisions. It has deleted certain subsidies, and by August will present a new Hydrocarbons Law, more attractive to the current foreign investment.

Similar conditions were present when it gave the “clean slate.” To the Argentine authorities the power to defer payment of import bills with some gas exchange with Bolivian long-term liabilities must be a temptation hard to refuse.

The supply of gas in Argentina is covered by imports of Bolivian gas and LNG. Importing LNG is paid in advance.

Our gas exporter-importer relationship with Argentina will last many years. We should carefully agreed in contracts to cut the power supply for non-payment.

Then we would have a good buyer and payer and not a good buyer, but bad payer, like now.

Carlos Miranda Pacheco, is an energy analyst.