Argentine Gas and Electricity markets - Energetic Integration in South America.

Abstract

This paper is aimed at showing the favorable conditions of the argentine energetic market with respect to exports. Both the electric and gas markets are analyzed after the significant changes they have undergone since 1991/1992. And finally we analyze, the chance of an energetic integration and the information about several projects under study.

Introduction

1991 was a year of essential changes in the electric market. A mainly state owned centralized management of generation resources switched to an open regulation system divided into three basic areas: generation, transmission and distribution; the subsequent deregulation of the first of these areas created competitive conditions within the electric industry. Additionally several effects are having a great impact in the development of the electric market:

  • Due to the absence of the state as an investor and to the remarkably high investment costs required to face hydroelectric projects, apart from Yacyreta, there are no significant projects in the market,

  • The contracts granted in the privatization of the big Power plants turned out to be an uncertainty factor as regards their expiration. Thus, generators face two alternatives: either they re-equip to be able to achieve an efficient competition level or they run the risk of being left out of the market.

  • There is an important fall in gas turbines and combined cycle units prices.

A similar analysis can be made of the gas industry. Before the privatization of Gas del Estado, Argentina's state owned gas transportation and distribution company, the gas pipelines in the country worked with a high load factor. New transportation capacity was available just to supply Residential peak demand, fact which was not always achieved. Out of the winter period, idle capacity was used to supply power plants.

As from 1993 and specially during 1994 and 1995 there was a significant increase in transportation capacity, mainly due to the obligation of the distribution companies to supply their non-interruptible customer, to keep minimum standards of service, and to the demand of industrial consumers and power plants for "no-cut off" firm capacity.

This resulted in a significant increase in transportation capacity, a lower load factor, and more availability of gas for the electric industry.

We should also underline that since May 1994, the price of gas at well-head was deregulated, encouraging the search and development of new reserves.

The first part of this paper will show in detail the growth of the electric market, the higher availability of gas for it, how some of the above mentioned issues interrelate and the effect that competition in the electric market will have in the coming years.

The second part of this paper analyses the possible energy complementation among the Southern Cone countries, and the advantages of some of the integration projects currently under way.

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