The Argentine government must continue reducing its interventionist
policies towards the energy sector if the industry is to attract
investor capital and grow beyond its current state of inefficiency,
according to a new Fitch Ratings report.
"In order to entice more private investment in Argentina's energy
industry, the oil and gas market will need clear and credible signals
that the government will either stop or significantly reduce
intervention, mainly through price controls, subsidies and export
bureaucracy," said Lucas Aristizabal, Senior Director. "Argentina would
also need to cut the sector deficit and aim to make the industry
self-sustainable."
Since the economic crisis in the early 2000s, Argentina's electricity
reserve margin has shrunk five-fold - from a significant oversupply
position to a moderate reserve margin in the mid-30% range.
Domestic oil production declined by 12% to 637,000 barrels per day (bpd)
in 2015 from 839,000 bpd in 2005. The decline in natural gas production
was steeper, with output of 1.28 trillion cubic feet (tcf) per year
reported in 2015 compared with 1.61 tcf in 2005, a 20% decline. During
the same time period, gas consumption increased by approximately 18% to
1.68 tcf from 1.43 tcf a decade ago.
The hydrocarbon challenges for Argentina include dismantling energy
price schemes, export controls, and increasing the stability and
predictability of payments from CAMMESA (Argentina's wholesale power
administrator) for gas consumption.
For more information, a special report titled "What Investors Want to
Know: Argentine Energy" is available on the Fitch Ratings web site at www.fitchratings.com
or by clicking on the link.
Additional information is available at www.fitchratings.com
Related Research
What Investors Want to Know: Argentine Energy
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Copyright Business Wire 2016
Source: Business Wire
(July 27, 2016 - 12:25 PM EDT)
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