Argentina government unblocks key Petrobras gas shipment amid supply cuts

BUENOS AIRES (Reuters)Argentina's government, facing domestic gas shortages and targeted service cuts, has unblocked the unloading of a key Petrobras gas shipment, which it added should stabilize local supply.

Recent cold weather had already hit gas supplies in the South American country, but that worsened when the unloading of the gas shipment was halted over payment issues, sparking shortages of compressed natural gas (CNG) at filling stations.

The energy secretariat said in a statement that state energy body Enarsa had bought a 44-MMm3 liquefied natural gas (LNG) shipment from Petrobras on Friday that was meant to begin unloading today. "But at the last minute the company challenged the letter of credit with which the fuel was to be paid and did not authorize the unloading of the LNG at the Escobar terminal," it said. It added this had led to supply to non-priority users including industry, thermoelectric plants and filling stations being cut to protect hospitals, schools, homes and businesses.

"The objective is to continue supplying the 'priority demand' and residential homes," the government said, adding that the unblocking of the shipment should mean that "throughout the day the situation of supply cuts will be regularized."

Argentina is rapidly ramping up gas and oil production from its own huge Vaca Muerta shale region, but still relies on imports to meet winter demand. Long term, it wants to become a net energy exporter and global supplier of LNG.

Presidential spokesman Manuel Adorni said the government was making efforts to avoid further gas supply issues. "It is a very harsh winter and demand went from 44 MMm3 to almost 70 MMm3," he said at a daily press conference.

The impact would not have been felt if the letter of credit had been accepted on Friday, he added.

(Reporting by Eliana Raszewski; Writing by Adam Jourdan;Editing by Elaine Hardcastle)


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