Argentina to launch new program to boost gas exploration

The Argentine government will soon announce a new program aimed at giving companies more incentive to explore and produce natural gas. The program will build on a previous incentive plan known as "gas plus," which allows companies to sell natural gas at higher-than-normal rates.
The new program, later confirmed by the Planning Ministry, would allow gas companies to sell excess supplies at above market prices.

The Energy Secretariat expects the new plan to attract investment totalling about $ 900 mm, though the Planning Ministry couldn't confirm this.
Apache recently received approval to sell natural gas at higher-than-normal rates under the Argentine government's "gas plus" program. It was the company's second approval so far this year and Apache has several approval requests in the pipeline. Under the plan, Apache will start selling 10 mm cfpd of natural gas to Cammessa, Argentina's wholesale power-market regulator.

Starting in January, Apache will sell the gas for $ 4.10 per mm Btu for one year. The gas will come from the Guanaco and Ranquil-Co fields in Neuquen province.
Earlier, Apache was approved to sell 50 mm cfpd of gas from two fields in the provinces of Neuquen and Rio Negro. That gas will sell for $ 5 per mm Btu beginning in 2011. That's about double what Apache and other companies have been getting per mm Btu for other projects. Some gas producers have been receiving an average of $ 2 a mm Btu, far below the average market price in many countries.

That's also far below the roughly $ 6 Argentina pays to import natural gas from Bolivia or what it pays to import liquefied natural gas from Trinidad and Tobago.
Argentina's gas industry has long faced unfriendly prices and unpredictable tax policies that discourage investment. Since Argentina devalued its currency in early 2002 and froze utility rates, companies here have voiced concern about severely reduced returns on their investments.