Buenos Aires (Platts)--18Mar2011/1117 am EDT/1517 GMT
Petrobras Argentina has gained approval for developing natural gas at preferential prices from two new projects in Neuquen, a southwestern province of Argentina, a company source said Friday. The source said the Energy Secretariat approved the projects on Thursday to develop gas at the Mulichinco and Tordillo formations in the El Mangrullo block under terms of Gas Plus, a federal program that allows production to be sold at prices above the domestic average of $2.66/MMBtu. Producers have been selling output from Gas Plus projects at $4-5/MMBtu, and are expected to fetch higher prices on increasing demand as factories and power plants look to shore up supplies in the face of dwindling output. National production of gas, which meets half of the country's energy needs, fell 10% to about 129 million cubic meters/d in 2010 from a high of 143.1 million cu m/d in 2004 on limited exploration and maturing fields. The government has said it will allow the final price for Gas Plus output to be sold at as much as the country pays for importing gas from Bolivia. It is now paying $7.60/MMBtu for 7.7 million cu m/d, according to industry data. Petrobras Argentina, which is controlled by Brazil's state-run Petrobras, can sell 85% of the output from the projects at preferential prices, according to the Energy Secretariat. The Argentine government created the Gas Plus program in 2008 to help rekindle exploration and production to arrest a decline in output and reserves that has exposed the country to shortages that occur at times of peak demand in the colder months of May to September. The government is now stepping up imports of Bolivian gas and LNG off the global market to meet demand.--Charles Newbery, newsdesk@platts.comSimilar stories appear in Gas Daily. See more information at http://bit.ly/GasDaily