And when it seemed that all possible complications had already been seen in the Argentine economy, a new and unforeseen cold wave arrived, which will force increase gas imports for the winter.
This implies that more dollars will come out than expected, just at a time when the accumulation of reserves became a critical objective for the government, and coinciding with industrialists’ demand for better access to foreign currency. Furthermore, this will represent an unforeseen obstacle to the reduction of public spending in the area of subsidies – which also casts a note of doubt on the sustainability of the fiscal surplus. And all this, not to mention, the risk that there are sectors that could see the gas supply interrupted.
Although the imported quantities seem small compared to those of other moments in recent history – in particular, with 2022, when the mix of low temperatures, insufficient local supply and a price boom as a consequence of the war in Ukraine-in any case they have the potential to tarnish the balance of dollars that the government has.
In recent days, the state energy company Cammesa He made an international call for bidders to buy 12 shipments of fuel oil and diesel, which would allow him to complete the volume of fuel necessary for the arrival of winter. Due to the cold wave – an average of six degrees below the temperature of a year ago, in the areas with the largest population – consumption increased above what energy officials had anticipated for this moment. of the year.
There was also an additional complication: the floods in southern Brazil, which complicated the original plan to have electricity supplied from the neighboring country, which will force rely more on liquid fuels. Speaking in numbers, the new imports will be 200,000 tons of fuel oil and 350,000 cubic meters of diesel.
It is estimated that the cost of these imports, outside of the original forecasts, will involve a minimum of US$500 million.
Contrary to initial forecasts, the Kirchner gas pipeline is only injecting 11 million cubic meters per day into the system
Previously, in April, it had been signed an agreement with Brazil to ensure the gas supply for the northern provinces, which was in danger due to the abrupt decrease in the arrival of Bolivian gas. The chosen mechanism was a triangulation of the gas that Brazil buys from Bolivia: as the neighboring country is increasing the use of hydroelectric energy, which is cheaper, it has a surplus of the gas that it had already committed to Bolivia, and it can sell it to Bolivia. to Argentina.
Still, that agreement not enough to solve the demand problem of gas that is generated in winter, for which the purchase of 10 ship shipments for US$209 million had been arranged in April. And before, in March, another 10 shipments had been awarded for US$210 million.
The gas pipeline, at half speed: there is not enough gas in the face of the cold wave
But climate problems were not the only factor that forced the import of liquefied gas to increase above what was expected. There are, above all, inconveniences not overcome in the local transportation system.
It cannot be said that it is a surprise, because many experts in the energy area had already anticipated it at the beginning of the year. Although the previous government had predicted that, thanks to the Kirchner gas pipeline -which supplies from Vaca Muerta to the network that reaches the middle region of the country-, the entire demand of the domestic market could be supplied, the truth is that that promise was not fulfilled.
In the plans, the new gas pipeline would gradually increase its gas delivery capacity, so that last summer it should have reached a level of 17 million cubic meters per day, to go up to 21 million in the second stage in May and , eventually reaching 40 million cubic meters.
However, delays in the progress of the work – which at the end of the year was only a quarter finished – mean that There is still an injection level of 11 million cubic meters per day. Furthermore, from the energy sector they allege that the Milei management also had its share of responsibility, because no progress was made with the construction of compressor plants in points such asTrayén, Salliqueló and Mercedes, which They could have doubled the capacity gas transportation.
Critics mention that, in fiscal zeal, the “chainsaw” ended up affecting the operation of the network, and given a worsening of weather conditions, there will now be a cost to pay with greater imports.
Checking the numbers: dollars on the decline
In the original projections, it had been predicted that in 2024 the energy trade balance, finally breaking a long series of years with deficits, would leave a robust surplus of US$4 billion.
That is the point that, now, remains under suspicion. In the first four months, there was a comfortable situation, in which thanks to oil exports and the low level of imports, a trade surplus and a positive energy balance of US$2,415 million was achieved.
The government preferred not to pass on the cost of importing gas to consumers, which will imply a higher level of subsidy
It is a strong contrast with the numbers that were recorded a year ago, when for the first quarter the sale of oil was 20% lower than this year and, above all, the purchase of gas was 178% higher. Consequently, for the January-April period, the energy trade balance showed a surplus of just US$263, which already turned into a deficit in May.
Will history repeat itself this year? In principle, it should not fall into a deficit area if oil export levels are maintained around US$900 million per month.
In any case, a winter complicated by low temperatures and with difficulties in supplying internal demand will lead to the numbers expected as energy surplus they will probably be revised downwards.
The fight over who pays the gas import bill
The inconvenience of this situation in the gas supply not only affects the accounts of the central bankwhich will have a lower contribution of reserves, but also will have its impact at the fiscal level.
It happens that the arrival of ships with liquefied gas implied a cost that cannot be passed on to the consumer in its entirety, which implies a subsidy effort that was not in the original plans.
He import price In the last tenders it was defined at US$9.99 per million BTU. It is a price that looks cheap compared to the fateful 2022, when in the midst of the geopolitical crisis due to the war in Ukraine, there were peaks of US$41. But it is also a high price for the parameters of the Argentine market, where the middle-income category pays a rate of US$1.20 per million BTU.
This generated a harsh struggle between the government and the distributors to determine who would pay the bill. It happens that, once the cost of regasification is added, imported gas costs US$13 per million BTU, and companies were reluctant to buy it at its real cost to resell it, in the best of cases US$4, assuming a loss.
Finally, after having left tenders void due to these disagreements, the government accepted that the distributors would pay a price in line with the domestic tariff. That is, it increased its subsidy forecast, because the possibility that the cost of imports would be passed on to residential consumers was also ruled out.
It was, once again, a decision that made it clear that for the economic program, the priority continues to be to accelerate the fall in inflation, even at the cost of making the fiscal surplus objective more complicated.
