Apache:Gets Approval For 2nd 'Gas Plus' Contract In Argentina
BUENOS AIRES -(Dow Jones)- Apache Corporation (APA) has gotten approval again
to sell natural gas at higher-than-normal rates under the Argentine government's
"gas plus" program, the company said Monday.
Under the plan, Apache will start selling 10 million cubic feet per day of
natural gas to Cammessa, Argentina's wholesale power-market regulator.
Starting in January, Apache will sell the gas for $4.10 per million British
thermal units for one year.
The approval is Apache's second under Argentina's Gas Plus program, which aims
to give companies a financial incentive to explore for gas by allowing them to
charge higher rates for gas from new discoveries.
"These Gas Plus projects are yet another sign of Apache's commitment to invest
to meet Argentina's future energy needs," said Jon Graham, vice president of
Apache's Argentina Region. "These substantial investments represent a milestone
in the exploration and development of gas reserves in non-conventional fields at
competitive prices."
The gas will come from the Guanaco and Ranquil-Co fields in Neuquen province,
Apache said.
Apache recently got approval to sell 50 million cubic feet per day of gas from
two fields in the provinces of Neuquen and Rio Negro. That gas will sell for $5
per million BTU beginning in 2011.
That's about double what Apache and other companies have been getting per
million BTU for other projects. Some gas producers have been receiving an
average of $2 a million BTU, far below the average market price in many
countries.
That's also far below the roughly $6Argentina pays to import natural gas from
Bolivia or what it pays to import liquefied natural gas from Trinidad and
Tobago.
So far, Apache is the only company with Gas Plus projects approved for gas
marketing, Apache said, noting that it has three more projects in line for
approval.
In the third quarter, Apache produced 184 million cubic meters of gas per day
in Argentina at an average price of $1.89 per thousand cubic feet, the company
said.
That included sales to regulated residential and power-generation markets and
deregulated industrial markets.
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.
That concern intensified in recent years as inflation raised operating costs
while soaring demand outpaced the supply of oil and gas, repeatedly putting
Argentina on the edge of a minor energy crisis.
Amid the higher demand, the government has sometimes rationed energy, and
power outages have affected tens of thousands of homes during extreme
temperatures.
Meanwhile, rising demand for gas has met with a diminishing supply, forcing
the government to import costly LNG during the cold winter months of May through
August.
This year concern about supplies led the government to extend the LNG contract
until next winter.
-Taos Turner, Dow Jones Newswires; 5411-4103-6728; taos.turner@dowjones.com
(END) Dow Jones Newswires
11-09-091401ET
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