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The quest for energy security in Argentina

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R. Kozulj
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Electricity consumption in Argentina has grown at a rate well above the net GDP in the last years, whereas capacity increase has been slower than consumption increase. This report deals with the problem of energy security in Argentina, which implies many challenges for the country. The author illustrates that the problem emerged first in 2004 as a consequence of the particular modalities adopted by the macroeconomic structural and energy sector reforms of the 1990s, which are still in place today. Main findings of the paper are:

energy supply expansion in Argentina depends primarily on the private sector rather than on the state, which adversely affect attempts to ensure supplies
the monetisation policy for gas and oil reserves has minimised the exploratory risk and led to a situation of inadequate gas supplies, which has jeopardised electric supply security
other sources of energy have not been able to compete efficiently with cheaper gas supplies
the exchange rate policy delayed the investments required to increase supplies and increased the gap between investments and demand growth
as a result, energy supply security in Argentina will remain dependent on gas, presumably through imports
moreover, it is impossible to foresee how and when Argentina will be able to fix the current distortions of its energy policy and ensure its energy security context

The author believes that in the next 10 years Argentina will face serious challenges in its attempts to achieve a reasonable level of electric power supply security. Still, the development of huge hydroelectric projects will be subject to the achievement of bilateral agreements. Recommendations are:

obstacles affecting internal governability must be overcome
strong regional agreements must be achieved with Bolivia and Brazil