Executive: Govt. must continue talks, end gas restrictions
Bnamericas Published: Thursday, June 24, 2004
Chilean authorities should continue to push Argentina to comply with its obligations under a 1995 gas treaty between the two countries even though Argentina has partially relaxed restrictions on gas exports, the CEO of Chilean gas distributor Gasco, Carlos Rocca, said at the Elecgas energy conference in Santiago Wednesday. "There's a risk that Chilean authorities will relax and sit back thinking that the situation is resolved," he said. Argentina's government passed resolution 659 last week, replacing the much-maligned resolution 27. 659 eliminates a restriction on gas exports to Chile that limited exports to their 2003 levels. Now exports are only restricted by the requirement to meet Argentina's domestic demand before export contracts are fulfilled, and export restrictions have fallen to about 4 million cubic meters a day (mcm/d) from 7mcm/d. However, the restrictions still violate the 1995 gas integration agreement between the two countries, which was signed between respective then-presidents Carlos Menem and Eduardo Frei, Rocca said. The principle of proportionality enshrined in this agreement requires that exports to Chile can only be reduced in the same proportion as domestic gas supplies in Argentina. The government "must keep pushing for treaty compliance," Rocca said. Stable gas supplies from Argentina going forward are vital for attracting investment in new power generation projects in Chile, he added. Chile's electricity sector needs appropriate signals from the government that give investors confidence in generation projects, but the government should not intervene too much in the sector, Rocca said. The Ley Corta law to regulate transmission costs was passed only a few months ago and now investors are concerned there could be more changes to the regulations, which means there is a danger they could postpone investment decisions, Rocca said. Rocca is also the CEO of Chilean gas distributor Innergy which is developing the US$214mn, 375MW Campanario thermoelectric project in southern Chile's Region VIII. Through 2007, gas-fired thermoelectric plants like Campanario are Chile's only "real option" to meet growing energy demand because coal plants, hydro plants and liquefied natural gas (LNG) imports are more long-term, Rocca said.
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