Argentina
Argentina is a significant Latin American energy producer and consumer. It is a net energy exporter, primarily to neighboring Brazil and Chile.

Note: Information contained in this report is the best available as of January 2005 and is subject to change.

BACKGROUND
Argentina is one of South America�s largest and most important economies. Though it suffered through a severe financial crisis in 2001-2002, the country�s economy has now almost fully recovered to pre-crisis levels. In 2004, Argentina�s real gross domestic product (GDP) grew at an estimated rate of 8.0% in 2004, slightly lower than the 8.7% growth rate of 2003. Economic forecasts predict 5.3% real growth in 2005.

Despite stronger economic growth, Argentina continues to deal with the 2002 default on its sovereign debt. In January 2005, the government initiated a program to exchange some $100 billion in old bonds for $50 billion in newly issued debt. This debt restructuring is crucial for Argentina to regain its ability to borrow for necessary domestic programs and infrastructure projects.

Argentina experienced an energy crisis in 2004. State-imposed caps kept energy prices low, which drove a dramatic increase in energy demand that outstripped supply. The government broke a natural gas export contract to Chile, began importing natural gas from Bolivia, and initiated energy rationing. The crisis threatened to stifle Argentina�s nascent economic recovery and severely strained the country�s relations with Chile. To prevent future crises, the Argentina government initiated a set of energy sector reforms, including the establishment of a new, state-owned energy company (Enarsa), incentives for greater investment in downstream infrastructure, and plans to eventually liberalize energy prices.

OIL
Overview
With around 2.7 billion barrels of proven oil reserves, Argentina is a significant player in the Latin American oil market. After peaking in 1998 at 916,000 barrels per day (bbl/d), Argentine oil production has steadily declined; nevertheless, in 2004, the country was still the third-largest oil producer in South America at 692,600 bbl/d. Argentina consumed 397,000 bbl/d of oil in 2004, with net exports of 295,600 bbl/d; Argentina�s oil exports go primarily to Chile and Brazil.

Exploration and Production
In 1999, the Spanish oil company Repsol merged with Argentina�s Yacimientos Petroliferos Fiscales (YPF), the formerly state-owned oil company. Repsol-YPF dominates oil exploration and production activities in Argentina, though the country�s oil sector is legally open to the private sector. In 2003, Repsol-YPF accounted for about 39% of Argentina�s oil production. Other significant, oil-producing companies in Argentina include Pan American Energy, ChevronTexaco and Petrobras Energía.

Two onshore basins produce 82% of Argentina's oil: Neuquen, in western-central Argentina; and Golfo San Jorge, in the southeast. Outside these established zones, there has been considerable interest in exploring offshore oil resources. In 2004, Petrobras Energia acquiring a license to explore the CAA-1 and CAA-8 blocks located off the country�s central-east coast. Nearly every oil company active in Argentina has plans to develop offshore fields, both in the central-east and Tierra del Fuego regions. These areas should also be a major center of exploration for the new, state-owned energy company, Enarsa, which will have control over all offshore concessions not already licensed to private companies.

Downstream Activities
Repsol-YPF dominates the downstream oil industry in Argentina, accounting for about half of the country's total crude oil refining capacity of 625,000 bbl/d. Other companies with significant refining capacity include Shell (110,000 bbl/d) and Esso (85,000 bbl/d).

Argentina's three major crude oil pipelines all start at Puerto Hernandez in the Neuquen basin. Two pipelines are domestic, transporting crude oil north to the Lujan de Cuyo refinery near Mendoza and east to Puerto Rosales on the Atlantic. The 268-mile, 115,000 bbl/d Transandino pipeline is Argentina�s only international oil pipeline, climbing over the Andes to a refinery in Chile. Argentina also supplies Paraguay and Uruguay with crude oil via tanker.

NATURAL GAS
Overview
Argentina has Latin America�s third-largest proven natural gas reserves, at around 21 trillion cubic feet (Tcf). Natural gas production in Argentina increased steadily over the last decade, with the country surpassing Mexico in 2000 to become Latin America's largest natural gas producer. However, natural gas production began to decline following the 2002 economic crisis, a decline that continued during 2003-2004. Argentina's natural gas consumption has increased annually in the past decade and is now the country�s dominant fuel source, accounting for 45% of primary energy consumption in 2002. Argentina also exports natural gas to its neighbors, principally Chile.

Argentina�s natural gas industry was at the center of the country�s 2004 energy crisis. Government-imposed caps on natural gas prices led to a surge in natural gas usage, exceeding the country�s gas supply. To prevent a similar crisis in the future, the Argentine government has promised to raise, and eventually liberalize, natural gas prices, though there is no firm timetable in place for this liberalization.

Exploration and Production
The Neuquen, Austral, and Noroeste basins contain Argentina�s largest proven natural gas reserves. As of 2003, the Neuquen basin held 47% of the country�s proven natural gas reserves and accounted for about 65% of natural gas production. Argentina�s proven reserves could increase substantially in the future, as gas companies have only explored five of 19 basins in the country.

Argentina began deregulating natural gas production in 1989 as part of its privatization of YPF. As with the oil industry, YPF (now Repsol-YPF) retains a dominant position in the upstream sector. During the first three quarters of 2003, Repsol-YPF produced 33% of the country�s natural gas, followed by Total Austral SA (19%). In 2004, Repsol-YPF announced two new, major natural gas discoveries in the Rincon del Mangrullo and Piedra Chenque blocks of the Neuquen basin.

Downstream Activities
Since the privatization of the system in 1992, the distribution portion of Argentina�s gas market has become dominated by MetroGas SA, Gas Natural Ban SA, Camuzzi Gas Pampeana SA, and Camuzzi Gas del Sur SA, most of which have strong foreign ownership.

Two companies, Transportadora de Gas del Sur (TGS) and Transportadora de Gas del Norte (TGN), control Argentina�s natural gas transmission system. TGS, a joint venture of Petrobras Energía and U.S.-based Enron, is South America's largest pipeline company. The company delivers about 60% of Argentina's total natural gas consumption, mainly in the greater Buenos Aires area. TGS operates the 2,130-mile, 1,024 million cubic feet per day (Mmcf/d) San Martin pipeline, connecting the southern part of the country with Buenos Aires, as well as the Neuba I and II pipelines. TGN (major shareholders include TecGas N.V., Compania General de Combustibles SA, and TotalFinaElf Gas Transmission Argentina SA) operates two main pipelines. The first, the 900-mile, 800-Mmcf/d Norte, runs from Campo Duran to the main compressor plant in San Jeronimo, eventually reaching Buenos Aires. The second pipeline, the 700-mile, 1,180-Mmcf/d Centro Oeste, runs from the Loma la Lata field, Neuquen province, to San Jeronimo.

One issue that emerged from the 2004 energy crisis was the inadequacy of Argentina�s domestic natural gas transmission network to meet increasing demand. To remedy this situation, the Argentine government introduced several measures to promote investment in the system, including the creation of financial trusts that could raise money from international capital markets to build new transmission infrastructure. These financial trusts would then have authorization to charge higher tariffs in excess of government-established levels in order to repay any capital financing. The first two projects enacted under this new program were the $285 million expansion of TGS�s San Martin, which will add some 10% to its capacity, and the $169 million expansion of TGN�s Norte pipelines.

Argentina has extensive pipeline linkages with its neighbors, including pipelines connecting Argentine to Chile. Three in the south; Tierra del Fuego, El Condor-Posesion, and Patagonia supply methanol plants in Chile. In the north, the 578-mile, 300-Mmcf/d GasAtacama pipeline runs from Cornejo, Argentina to Mejillones, Chile. Owned by Endesa and U.S.-based CMS, GasAtacama supplies the companies� Nopel power plant. Also in the north, the 250-Mmcf/d NorAndino, operated by Belgium�s Tractebel, runs parallel to GasAtacama. In the central region, the 288-mile, 307-Mmcf/d GasAndes pipeline, majority owned by TotalFinaElf, connects the Neuquen basin in Argentina to Santiago, Chile. Also in the central region, the 330-mile, 343-Mmcf/d Gasoducto del Pacifico connects Neuquen to central Chile. Majority owned by TransCanada (30%), El Paso (21%), and Gasco (20%), Gasoducto del Pacifico supplies municipal distributors and gas-fired power plants.

Using these connections, Argentina exports most of its surplus natural gas to Chile. However, this relationship was strained by Argentina�s 2004 energy crisis, when Argentina repeatedly reduced natural gas exports to Chile in order to make up for domestic shortages. In May 2004, Argentina cut exports to Chile by 50%, and again in January 2005, Argentina reduced these exports as a heat wave increased domestic demand for natural gas. Argentina is Chile�s sole source of natural gas imports, and the continued supply disruptions have created considerable tension between the two countries.

The 275-mile, 100-Mmcf/d Parana-Uruguayana pipeline connects Argentina and Brazil. The pipeline provides natural gas to AES Brasil Energia�s 600-MW power plant in Uruguayana. The Argentine section is operated by Transportadora de Gas de Mercosur; the 16-mile Brazilian section is operated by Transportadora Sul Brasileira de Gas. There are plans to construct a 384-mile extension of the pipeline from Uruguayana to Porte Alegre, where the pipeline would supply thermal power plants.

In January 2003, Argentine natural gas began to flow to Montevideo, Uruguay, through the 250-mile, 190-Mmcf/d Gasoducto Cruz del Sur (GCDS, Southern Cross pipeline). The GCDS project also includes a concession covering a possible extension from Uruguay to Porto Alegre in southern Brazil; major partners in the GCDS project are British Gas (40%) and Pan American Energy (30%).

Argentina imports gas from Bolivia through the 274-mile, 212-Mmcf/d Yacimientos-Bolivian Gulf (Yabog) pipeline. Argentina began importing natural gas from Bolivia during the 2004 energy crisis, which it had not done since 1999. Argentina continued to import gas from Bolivia following the end of the energy crisis, and the two countries made agreements to continue the trade through 2006. To facilitate these increased imports, the Argentine government solicited bids for the construction of a $1 billion, 602-mile Gasoducto Noreste Argentino between the two countries

COAL
Argentina has very limited coal resources, and coal is not a major component of the country's fuel mix. With only 474 million short tons (Mmst) of coal reserves, the country produced 0.23 Mmst and consumed 1.4 Mmst in 2002. There is a small coalfield at Rio Turbio in southern Patagonia. Imports come from Australia, the United States, and South Africa.

ELECTRICITY
Overview
Argentina has the third-largest power market in Latin America, relying mostly on hydropower and natural gas to fuel its electricity sector. In 2002, the country had 27 million kilowatts of installed generation capacity, of which 49% was fossil fuel-based (primarily natural gas) and 42% hydroelectric. Demand has steadily grown since 1991, though the economic collapse of 2001-2002 caused a temporary decline in electricity production and consumption. Argentina also trades electricity with neighboring countries.

Market Structure
Argentina has one of the most competitive, deregulated power sectors in South America. The functions of generation, transmission, and distribution are open to the private sector, but there are restrictions on ownership within the industry. Argentine law guarantees access to the grid in order to create a competitive environment and to allow generators to serve customers anywhere in the country.

Independent and state-owned companies carry out generation in a completive, mostly-liberated market. The distribution sector is more heavily regulated, with three primary distribution companies (Edenor, Edesur and Edelap) controlling the market. Unlike the generation and distribution sectors, Compania Nacional de Transporte Energetica en Alta Tension (Transener) controls electricity transmission, which owns and operates the electric grid under a 95-year license agreement entered into with the Argentine government in 1993.

Hydroelectricity
Hydroelectricity plays a major role in Argentina�s energy sector. The Yacyreta hydroelectric dam, with its 3,200 megawatts (MW) of installed capacity, is the largest power plant in Argentina. In 2002, the Yacyreta plant accounted for 16% of the country�s total electricity production. Argentina and co-owner Paraguay share the electricity generated from Yacyreta evenly, with most of Paraguay's electricity exported to Argentina. The 1,890-MW Salto Grande is another bi-national project, owned by the governments of Argentina and Uruguay.

Argentina has the potential to significantly expand its hydroelectric generating capacity, as only some 22% of the country�s surveyed hydroelectric potential has so far been exploited. It is likely, though, that investment will continue to favor gas-fired power plants over new hydroelectric ones, so long as government price controls keep natural gas prices artificially low.

Nuclear Power
Argentina currently has two nuclear power plants in operation: the 357-MW Atucha I and the 648-MW Embalse facilities. Nucleoelectrica Argentina SA owns and operates both plants. In addition, the 745-MW Atucha II plant is under construction. Work on Atucha II stopped in 1994, after the government was unsuccessful in privatizing the two existing facilities. However, the government announced in December 2003 that it would spend $300 million to complete the project, with planned completion in 2008.

ENVIRONMENT
Notwithstanding its recent economic difficulties, Argentina experienced strong economic growth during much of the 1990s. In 2002, Argentina was South America's third-largest energy consumer, as well as the continent's third largest emitter of carbon dioxide from the consumption of fossil fuels.

In 2002, Argentina had some of South America's highest per capita energy consumption (64.9 million Btu per person) and per capita carbon dioxide emission (3.2 metric tons per person) rates, though both numbers declined slightly due to the 2002 economic collapse. Conversely, energy consumption per dollar of GDP (energy intensity) and carbon dioxide emissions per dollar of GDP (carbon dioxide intensity) are both relatively low compared to other South American countries.

Argentina also faces urban air pollution and industrial pollution problems. While past commitments to the reduction of greenhouse gas emissions and towards increasing the use of renewable fuels augured well for environmental protection, recent political turmoil has left the country's environmental future uncertain.

COUNTRY OVERVIEW
President: Nestor Kirchner (since May 25, 2003)
Independence: July 9, 1816 (from Spain)
Population (2004E): 39.1 million
Location/Size: Southern South America/2.8 million square kilometers (1.1 million square miles), about four times the size of Texas
Major Cities: Buenos Aires (capital), Cordoba, La Plata, Mendoza, Rosario, Santa Fe
Languages: Spanish (official), English, Italian, German, French
Ethnic Groups: white (mostly Spanish and Italian) 97%, mestizo, Amerindian, or other nonwhite groups 3%
Religion: nominally Roman Catholic 92% (less than 20% practicing), Protestant 2%, Jewish 2%, other 4%

ECONOMIC OVERVIEW
Minister of the Economy: Roberto Lavagna
Currency: Peso
Financial Exchange Rate ( 1/11/05): US$1 = 2.96 Argentine Pesos
Gross Domestic Product (2003E): $127.4 billion (2004E): $153.1 billion (2005F): $167.3 billion
Real GDP Growth Rate (2003E): 8.7% (2004E): 8.0% (2005F): 5.3%
Inflation Rate (2003E): 13.4% (2004E): 4.4% (2005F): 7.2%
Unemployment Rate (2004E): 17.3%
Current Account Balance as a percentage of GDP: (2003E): 6.2% (2004E): 3.0% (2005F): 2.5%
Merchandise Exports (2003E): $29.4 billion
Merchandise Imports (2003E): $13.1 billion
Merchandise Trade Balance (2003E): $16.3 billion
Main Destinations of Exports (2003E): Brazil (16%), Chile (12%), United States (11%), Spain (5%)
Major Export Products: Edible Oils, fuels and energy, cereals, feed, motor vehicles
Main Origins of Imports (2003E): Brazil (34%), United States (16%), Germany (6%), China (5%)
Major Import Products: Machinery and equipment, motor vehicles, chemicals, metal manufactures, plastics
External Debt (2002E): $131 billion (2003E): $138 billion (2004E): $147 billion

ENERGY OVERVIEW
Proven Oil Reserves (1/1/05E): 2.6 billion barrels
Oil Production (2004E): 692,600 barrels per day (bbl/d)
Oil Consumption (2004E): 397,000 bbl/d
Net Oil Exports (2004E): 295,600 bbl/d
Natural Gas Reserves (1/1/05E): 21.6 trillion cubic feet (Tcf)
Natural Gas Production (2002E): 1.28 Tcf
Natural Gas Consumption (2002E): 1.07 Tcf
Net Natural Gas Exports (2002E): 0.21 Tcf
Coal Reserves (2002E): 474 million short tons (Mmst)
Coal Production (2002E): 0.23 Mmst
Coal Consumption (2002E): 1.4 Mmst
Electric Generation Capacity (2002E): 27.0 million kilowatts
Electricity Consumption (2002E): 81.7 billion kilowatt-hours (Bkwh)
Electricity Generation (2002E): 81.4 Bkwh (conventional thermal 49%, hydroelectricity 44%, nuclear 7%)

ENVIRONMENTAL OVERVIEW
Total Energy Consumption (2002E): 2.5 quadrillion Btu* (0.6% of world total energy consumption)
Energy-Related Carbon Dioxide Emissions (2002E): 120.5 million metric tons of carbon dioxide (0.5% of world carbon dioxide emissions)
Per Capita Energy Consumption (2002E): 64.9 million Btu (vs. U.S. value of 339.1 million Btu)
Per Capita Carbon Dioxide Emissions (2002E): 3.17 metric tons of carbon dioxide (vs U.S. value of 19.97 metric tons of carbon dioxide)
Energy Intensity (2002E): 7,095 Btu/ $1995 (vs. U.S. value of 10,618 Btu/ $1995)**
Carbon Dioxide Intensity (2002E): 0.35 metric tons of carbon dioxide/thousand $1995 (vs. U.S. value of 0.63 metric tons/thousand $1995)**
Fuel Share of Energy Consumption (2002E): Natural Gas (45.3%), Oil (35.0%), Hydroelectric (14.6%), Nuclear (2.6%), Coal (1.3%), Renewable (0.3%)
Fuel Share of Carbon Dioxide Emissions (2002E): Natural Gas (50.2%), Oil (47.3%), Coal (2.5%)
Status in Climate Change Negotiations: Non-Annex I country under the United Nations Framework Convention on Climate Change (signed June 12, 1992 and ratified on March 11, 1994). Signatory to the Kyoto Protocol (signed March 16, 1998 and ratified on September 28, 2001).
Major Environmental Issues: Erosion resulting from inadequate flood controls and improper land use practices; irrigated soil degradation; desertification; air pollution in Buenos Aires and other major cities; water pollution in urban areas; rivers becoming polluted due to increased pesticide and fertilizer use.
Major International Environmental Agreements: A party to the Antarctic-Environmental Protocol, Antarctic Treaty, Biodiversity, Climate Change, Desertification, Endangered Species, Environmental Modification, Hazardous Wastes, Law of the Sea, Marine Dumping, Nuclear Test Ban, Ozone Layer Protection, Ship Pollution and Wetlands. Has signed but not ratified Marine Life Conservation.

* The total energy consumption statistic includes petroleum, dry natural gas, coal, net hydro, nuclear, geothermal, solar, wind, wood and waste electric power. The renewable energy consumption statistic comes from International Energy Agency (IEA) data and includes hydropower, solar, wind, tide, geothermal, solid biomass and animal products, biomass gas and liquids, industrial and municipal wastes. Sectoral shares of energy consumption and carbon emissions also come from IEA data.
** GDP figures from OECD estimates based on purchasing power parity (PPP) exchange rates.

ENERGY INDUSTRY
Organization: There are many participants in the mostly-privatized energy sector. Examples of oil and natural gas producers are Repsol-YPF, Pan American Energy, Petrobras Energía, ChevronTexaco, TotalFinaElf, Sipetrol, Tecpetrol, and Pluspetrol. Major natural gas pipeline companies include Transportadora de Gas del Norte and Transportadora de Gas del Sur. Distribution and generation of electricity is competitive, though a single company manages the transmission network. In 2004, the Argentine government established a new, state-owned energy company, Enarsa, which will become involved in all aspects of the energy sector.
Major Ports: Bahía Blanca, Buenos Aires, La Plata
Major Oil and Gas Producing Basins: Neuquen, Austral, Golfo San Jorge, Cuyana, Noroeste
Major Refineries (Capacity): Repsol-YPF La Plata (189,000 bbl/d), Shell Buenos Aires (110,000 bbl/d), Repsol-YPF Lujan de Cuyo (106,000 bbl/d), Esso Campana (84,500 bbl/d), Refineria San Lorenzo (37,600 bbl/d), Refinor - Campo Duran (32,000 bbl/d)

Sources for this report include: Banco Central de la República Argentina; Business News Americas; CAMMESA; CIA World Factbook; Global Insight; Dow Jones; Economist Intelligence Unit ViewsWire; ENARGAS; Financial Times; Instituto Nacional de Estadística y Censos; International Energy Agency; International Oil Daily; LatinFinance; Oil Daily; Oil and Gas Journal; OLADE; Petroleum Economist; Petroleum Finance Week; Petroleum Intelligence Weekly; ; Platt's Commodity News; Platt's Global Power Report; Platt's Oilgram News; Power in Latin America; Repsol-YPF; Reuters; Secretaría de Energía (Argentina); Transportadora de Gas del Norte (TGN); Transportadora de Gas del Sur (TGS); U.S. Energy Information Administration; World Markets Analysis.

LINKS

For more information on Argentina, see these other sources on the EIA web site:
EIA - Country Information on Argentina

Links to other U. S. Government sites:
CIA World Factbook - Argentina
U.S. Department of Energy's Office of Fossil Energy's International section - Argentina
U.S. State Department Background Notes - Argentina
U.S. Embassy in Argentina
U.S. Trade and Development Agency - Latin America and the Caribbean
U.S. State Department's Consular Information Sheet - Argentina

The following links are provided solely as a service to our customers, and therefore should not be construed as advocating or reflecting any position of the Energy Information Administration (EIA) or the United States Government. In addition, EIA does not guarantee the content or accuracy of any information presented in linked sites.

Argentina's Embassy in Washington, DC
The Latin American Integration Association (ALADI)
Argentine Economy Links
International Newspapers Online: Argentina
Argentina's Ministry of Energy
Argentine Energy Distribution Association (ADEERA)
Argentine Large-users of Energy Association (AGUEERA)
Argentine National Statistic Office
CAMMESA
Central Bank (Argentina)
ENER
ENERGAS
Petrobras Energía
Repsol-YPF
Tecpetrol
TGN
TGS
Totalgaz Argentina
Transener SA
Vintage Petroleum

You may be automatically notified via e-mail of updates to this or other Country Analysis Briefs. To join any of our mailing lists, go to http://www.eia.doe.gov/listserv_signup.html and follow the directions given.

Return to Country Analysis Briefs home page