Has Argentina’s Recovery Run Out Of Gas?

By Carlos A. de Kemmeter and Juan Carlos Sanguinetti

This edition of

Argentine Business Law Watch¹ reports on recent government rules responding to the Argentine energy crisis. As winter approaches and natural gas consumption increases, the Government has announced plans to curtail exports of natural gas and gas-generated electricity, as well as other measures to reduce domestic consumption. How can a country rich in gas reserves suffer a shortage? Why are Argentina’s neighbors, particularly Chile, extremely worried? Read on for answers to these questions and more.

A Pipeline to the Truth

Since Argentina devalued its currency in 2002, public utility tariffs have remained largely frozen. Providers of gas, electricity and water have been obliged to continue charging consumers in pesos without substantial tariff adjustments to reflect currency depreciation or the effects of inflation. Most, if not all, of these public utilities carry significant financial debt and are bound, under