Argentine Spot Natural Gas Prices Soar on Weakening Infrastructure, According to Platts

Business Wire, June 25, 2002

Business Editors & Energy Writers

Spot natural gas prices have soared by more than 400% in Argentina's capital city since the start of the winter season, according to spot market data released by Platts, the energy information, research, consulting and marketing services business of The McGraw-Hill Companies (NYSE: MHP).

According to an exclusive spot market survey carried out by Latin Gas Daily, daily gas prices at the Buenos Aires Citygate have risen as high as Peso13/MMBtu in this month, compared with Peso3.05/MMBtu at the start of the winter season, and an average of Peso2.79/MMBtu in May.

The cost of buying gas on the spot market at Buenos Aires Citygate has spiked because of transportation problems in the country, caused by breakdowns in pipelines connecting the capital with Argentina's major supply basin in the Neuquen province. At Peso3.345/MMBtu, spot prices at the Neuquen wellhead have not risen by as much as in Buenos Aires, reflecting rising shipping costs.

Repairs that would help ease the spot market crunch in Buenos Aires have been slow because the local pipeline operator, Transportadora de Gas del Sur, needs to import replacement parts, and pay for those parts in dollars. "The rapid devaluation of the peso since it was delinked from the dollar has made this an extremely difficult task for TGS," said Debra Beachy, editor of Latin Gas Daily. "Many companies in Argentina are having a hard time because their revenues remain in pesos, making it difficult for them to pay for maintenance in dollars."

Latin Gas Daily is one of Platts' newest daily publications, covering the emerging spot gas markets and news developments in Mexico, Central America and South America. For more information, visit www.latingasdaily.platts.com.

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