The cold forces them to buy expensive energy and they fear that there will be cuts to CNG stations and the industry

The cold forces them to buy expensive energy and they fear that there will be cuts to CNG stations and the industry
The cold forces them to buy expensive energy and they fear that there will be cuts to CNG stations and the industry

The arrival of a polar cold wave to the City and Greater Buenos Aires put into action stress on the energy system and next weekend will be demanded to the maximum by users. The Government went out to urgently purchase liquid fuels abroad to ensure the supply of electricity and natural gas for industries, in an import that will be paid dearly in dollars and for which the Treasury will be responsible for paying its cost in pesos with subsidies.

However, according to qualified sources in the sector who prefer to speak in off the record, Between this Friday and Sunday, gas supply cuts to service stations could be reactivated that sell Compressed Natural Gas (CNG) with interruptible contracts and to the industries. “The system is going to be critical,” say those who know the day-to-day life of the office.

Fuel imports

To avoid further inconveniences, the Wholesale Electricity Market Administration Company (Cammesa) called for a tender for 12 shipments of fuel: seven of 50,000 m3 of diesel and five of fuel oil for 200,000 tons, according to the portal. EconoJournal. Offers are received this Thursday and the cost will be around 500 to 600 million dollars. But not even the traders They are confident that there will be enough availability to sell.

By using these liquids, thermal plants release gas for use by the rest of the users (homes, businesses and industries). The cost of imported diesel and fuel oil exceeds $22 per million BTU, while domestically produced and imported natural gas is around $4.50 to $7 depending on where it is injected into the gas pipelines.

A classified report circulating in the industry and accessed Clarion calculates that This winter the Government could have to “make cuts in the 7 northern provinces for about 22% of the supply of natural gas and/or electrical energy associated”.

The document indicates that there is a lack of about 10 million m3 per day (MMm3/d) of gas in the Center of the country due to the delay in the construction of theTrayén, Salliqueló and Mercedes compressor plants of the Presidente Néstor Kirchner Gasoduct (GPNK), which would only be enabled between June and August, about 9 months after their original date. Here the official lack of definition would also weigh in not contracting a regasification ship for Bahía Blanca – like the one that Excelerate Energy has in Escobar, contracted by YPF and Energía Argentina (Enarsa) – to support operations.

In the north of the country there would be an operating deficit close to 2.2 MMm3/d even if an agreement is negotiated with Chile for the neighboring country to import liquefied gas. The delays in the tender and construction of the Northern Gasductin the transition stage from the previous government to the current one, were key to reaching this situation.

The demand and supply projection reports from the National Gas Regulatory Entity (Enargas) indicate a drop in pressure –linepack– of gas pipelines. The TGS system would operate on Monday the 27th with 25 million m3 less than the minimum recommended pressure, proof of the lack of fuel.

More spending on subsidies

In terms of costs, since only a maximum rate of US$2.90 in gas and $44,401 per megawatt-hour in electricity is recognized for users who no longer have subsidies (and only 20% in gas and 5% in electricity to middle- and low-income households), the Government will have to allocate subsidies to make up the difference.

According to the operational data of the energy system, the electricity cost averages $120,000/MWh these days, and on Saturday they would have a peak of more than $166,000. That is, even high-income users and industries would be paying just 25% of the generation price on a day in which the minimum temperatures in the AMBA can reach 3 degrees and the maximum would not exceed 11°.

The average cost estimated by the Government for the entire May-July quarter is $82,071/MWh and that is one of the reasons why rate increases were suspended this month: it represents an increase of more than 80% in the wholesale cost and its impact on end users would affect more than 40%.

Although At the beginning of 2024, President Javier Milei and the Minister of Economy, Luis Caputo, recomposed the rates very strongly, that initial movement would already be falling short and spending on subsidies can drop from the equivalent of 1.6% of the Gross Domestic Product (GDP) last year to between 1.4% and 1.5% in the current year, according to what economist Julián Rojo calculated .

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