How the global gas crisis is impacting central countries and why the situation is different in Argentina

The prices of raw materials have recorded sharp increases since the start of the year due to the reopening of the global economy after the lockdowns applied to moderate the progress of the coronavirus pandemic. In this direction, In recent months, there has been an explosion in the price of natural gas, which has soared 250% in Europe, 175% in Asia and 100% in the United States.

According to the agency Bloomberg, Natural gas prices hit a new seven-year high in the United States on Monday. Gas for October delivery rose 11%, the biggest daily jump since February, to $ 5,706 per million British thermal units, a level not seen since early 2014.

In this context, In several European countries, the gas crisis is causing a sharp rise in electricity prices. This is the case of the United Kingdom (14%), Turkey (15%) or Germany (11.5%), with the highest rates in the European Union.

In Spain, which relies heavily on gas-fired power plants, prices have skyrocketed while in the UK they analyze the supply of state loans to energy companies that hire clients of companies that could go bankrupt in the near future. following the rise in wholesale prices for natural gas, as announced. by the Secretary of Commerce, Kwasi Kwarteng, quoted by the agency Reuters.

In recent months, there has been an explosion in the price of natural gas, which has soared 250% in Europe, 175% in Asia and 100% in the United States.

Price increases in residential tariffs have not yet been publicly announced in Austria, but Karina Knaus, director of the Center for Economics, Consumers and Prices at the country’s Energy Agency, hinted that there might be: “Since price movements in recent months have been very pronounced and unusual and that there is currently no trend change seen, it can be assumed that prices may also increase here in the coming weeks and months, ”he pointed out.

Typically, European utilities turn to coal when gas prices and alternative energy sources rise. However, declining supply from European mines and strong demand from China have also pushed up the price of this ore.

Meanwhile, the Italian Prime Minister, Mario draghi, a d an aid plan to cushion the impact on consumers’ bills of rising gas prices on international markets. The Italian government has calculated that in the next quarter, electricity prices could increase by 40% and gas prices by 30%.

The situation in Argentina

According to sources in the local energy sector, unlike many countries in the region, Argentina has an energy matrix based primarily on gas. And to guarantee this resource, the Government has put in place, through the Gas.Ar Plan, a gas production promotion policy that allows it to meet the priority demand – both residential and power stations – of some 70 million cubic meters with local production.

For this, the sources indicated, the main incentive was the “contractualization” of the gas market, calling on the producing companies to offer the resource at a stable competitive price for four years. The companies have thus reached a price horizon justifying the investments, estimated at more than 5,000 million dollars over the four years of the plan.

According to data from the National Energy Secretariat, in July of this year, around 64.9 million cubic meters per day of unconventional gas was produced at Vaca Muerta.

Likewise, additional production is encouraged for the peak of winter, in order to gradually reduce LNG imports; firm exports to neighboring countries to break the seasonality of gas consumption; and the long-term “contractualization” of the private gas market.

As for the residential user, explain the sources, he is guaranteed a tariff in pesos on his gas bill, arbitrated by the State, which guarantees the payment of the difference between the residential tariff and the real cost of gas which is paid to the producer.

The consumer is also kept away from price fluctuations, while production is encouraged. “This policy has started to yield very positive results for the country. Not only because of the growth in local gas production, but also in light of the energy crisis facing the world due to the scarcity of the resource.», Assured the sources.

According to data from the Nation’s Energy SecretaryIn July of this year, approximately 64.9 million cubic meters per day of unconventional gas was produced at Vaca Muerta. Besides, production increased 5.9% from June and 17.3% year-on-year. Regarding gas, in July, around 130 million cubic meters of total production were achieved per day, an increase of 2.7% compared to the previous month and 2.8% year-on-year. With the Gas.AR Plan, gas supply has been set at a maximum value of $ 3.5 per million BTUs, a very competitive price around the world.

“Precisely the reverse is observed in the central countries, which, without good planning, found themselves entering winter with a shortage of gas resources and forced to pass on the cost of input on consumers. This debate is taking place in countries like the United States, Germany, Austria, Holland, England, China and other Asian countries, ”they said from the local energy sector.

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