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Cablegate: Argentina: Energy Secretary On Wirec, Goa Energy

VZCZCXYZ0000
RR RUEHWEB

DE RUEHBU #0407/01 0922130
ZNR UUUUU ZZH
R 012130Z APR 08
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 0616
INFO RHMFIUU/DEPT OF ENERGY WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHMFIUU/HQ USSOUTHCOM MIAMI FL
RUCNMER/MERCOSUR COLLECTIVE

UNCLAS BUENOS AIRES 000407

SIPDIS

SIPDIS
SENSITIVE

TREASURY FOR LTRAN AND MMALLOY
E FOR THOMAS PIERCE
PASS USTR FOR DUCKWORTH
USDOC FOR 4322/ITA/MAC/OLAC/PEACHER
US SOUTHCOM FOR POLAD

E.O. 12958: N/A
TAGS: ENRG EPET ECON PINR AR
SUBJECT: ARGENTINA: ENERGY SECRETARY ON WIREC, GOA ENERGY
CONSERVATION AND NATURAL GAS PRODUCTION INCENTIVES

REF: (A) Buenos Aires 356
(B) Buenos Aries 131
(C) Buenos Aires 19

This cable contains business-sensitive information - not for
internet distribution.

-------
Summary
-------

1. (SBU) Argentina will consider making a renewable energy pledge
following its participation in the Washington WIREC conference,
according to GoA delegation head Energy Secretary Cameron. He noted
to Ambassador Argentina's recently implemented energy conservation
measures and the GoA's passage of a biofuels law in 2007 that
provided tax incentives for biodiesel and ethanol production and
mandates that biofuels contribute 5% of the domestic fuel mix by
2010. Cameron also highlighted the GoA's recently announced "Gas
Plus" initiative (designed to incent new natural gas exploration by
authorizing higher prices for natural gas obtained via new or
hard-to-reach gas reserves) but emphasized that a determination of
"appropriate" gas pricing to promote exploration and development
will remain contentious. Argentina remains committed to
participating in the construction of LNG regassification plants in
Uruguay and in Argentina (jointly with Venezuela's PDVSA) and plans
to temporarily position a leased LNG regassification ship in a
Buenos Aires province port to ensure adequate natural gas supplies
for domestic industry and home heating during the upcoming (austral)
winter season peak demand period. Argentine exports of natural gas
to Chile will "normalize" in the coming months, Cameron said, but
alleviating constraints on U.S. energy company Apache Energy's
production of gas in Tierra del Fuego province will have to wait on
the construction of a second gas pipeline from Tierra del Fuego to
the mainland, expected in 2-3 years. End Summary.

----------------------------------
WIREC: Seeking an Argentine Pledge
----------------------------------

2. (SBU) On March 28, Ambassador met with GoA Planning Ministry
Energy Secretary Daniel Cameron to review the Secretary's
participation as the head of the GoA Del to the Washington WIREC
renewal energy conference, to encourage the GoA to make a WIREC
International Action Program pledge by the April 4 deadline, to
discuss current GoA energy sector initiatives, and to highlight U.S.
upstream player concerns about declining profitability and
regulatory constraints. (Ambassador had previously met with Cameron
in August 2007 to present him a letter from U.S. Secretary of Energy
Bodman inviting him to a Vienna meeting of the Global Nuclear Energy
Partnership -- GNEP -- and inviting Argentina to become a GNEP
partner.)

3. (U) While WIREC conference reports noted no/no substantive GoA
interventions, Cameron praised conference organization, President
Bush's remarks calling for free trade in renewable energy
technology, and the EU's presentation on their 20/20 renewable
energy initiative. He noted the GoA's recently implemented energy
conservation measures (Ref C) and the earlier passage of a biofuels
law in 2007 that provided tax incentives for biodiesel and ethanol
production and mandates that biofuels contribute 5% of the domestic
fuel mix by 2010. The GoA remains concerned, he said, about the
broad impact of global biofuels development on basic food prices.

4. (SBU) Ambassador noted that more than 100 voluntary WIREC pledges
have been received to date, a clear demonstration of how far and
fast renewable energy has come into the energy mainstream since the
Bonn 2004 renewable energy meeting. He encouraged Cameron to
consider making an Argentine pledge as part of the Washington
International Action Program by the April 4 deadline. Cameron was
unaware of Brazil's pledge to maintain a 45% renewably generated
share of its total energy supply and an 80% renewable energy share
in electricity generation. He asked if Embassy could provide him
details on WIREC pledges made to date. Cameron noted the short
deadline, but offered to consider an Argentine pledge. (EconCouns
subsequently provided Cameron a list of all country pledges.)

---------------------------------------
GoA Energy Initiatives and Winter Plans
---------------------------------------


5.(SBU) Ambassador questioned implementation of the GoA's recently
announced "Gas Plus" initiative (designed to encourage new natural
gas exploration by authorizing higher prices for natural gas
obtained through new or untapped, hard-to-reach gas reserves - Ref
A) and noted that our U.S. industry contacts call its more
market-oriented pricing approach a step in the right direction.
Cameron agreed that the Gas Plus program would encourage some
incremental domestic production, but emphasized that "appropriate"
pricing to encourage new natural gas exploration and development
will remain a contentious issue for some time. Unlike oil, he said,
75% of global natural gas production is consumed locally and a
global commodity market for any gas other than LNG (7% of the global
natural gas market) has yet to be developed. Argentina remains
committed to participating in the construction of an LNG
regassification plant in Uruguay and a second regassification plant
in Argentina jointly with Venezuela's PDVSA. In addition,
Argentina's national hydrocarbon company, ENARSA, has contracted
with Repsol/YPF (Argentina's largest integrated energy producer) to
temporarily position an LNG regassification ship in the Buenos Aires
province port of Bahia Blanca to help ensure adequate natural gas
supplies will be available to meet the needs of domestic industry
and consumer home heating during the upcoming (austral) winter
season peak demand period. Finally, he noted that Argentina remains
committed to build a second Argentina/Bolivia gas pipeline and
linked cyclic hydrocarbon extraction plant (Ref B).

--------------------------
Apache in Tierra Del Fuego
--------------------------

6. (SBU) Ambassador noted U.S. firm Apache Energy's investment of
over $125 million in Tierra del Fuego province since acquiring
properties there from Pan American Energy in 2006/7. (Apache has
drilled eight gas wells and made two new gas field discoveries,
helping it achieve over 20 million cubic feet per day of new gas
production.) However, the GoA's decision to cut gas exports to
Chile from Tierra del Fuego has "stranded" large volumes of natural
gas there pending a planned expansion of the gas pipeline that
connects Tierra del Fuego with the Argentine mainland.
Over-injection into the existing Tierra del Fuego gas pipeline by
Petrobras and Total has forced Apache to re-inject 60 million cubic
feet of natural gas per day into the ground, a loss to the company
and to GoA export revenues. Cameron said he was aware of the
situation and had met a number of times with Apache management.
Argentine exports of natural gas to Chile will "normalize" in the
coming months, he said, but a full resolution of Apache's problem
will have to wait on the construction of a second gas pipeline from
Tierra del Fuego to the mainland, expected in 2-3 years.

--------
Bio Note
--------

7. (U) Daniel Omar Cameron was appointed Planning Ministry Secretary
of Energy by President Nestor Kirchner in May 2003. He is
considered close to both Nestor and current president Cristina
Fernandez de Kirchner. Cameron's entire professional career has
focused on the energy sector and, prior to his current position, he
served as member of the Administrative Committee of the Federal
Power Transportation Trust Fund and member of the Committee of the
Electric Power Federal Council, representing the province of Santa
Cruz. He was also member of the (then GoA-owned) integrated
hydrocarbon producer YPF's Board of Directors, where he represented
hydrocarbon producing provinces. Cameron was the Executive
Secretary of the Organization of Hydrocarbon Producing States

SIPDIS
(OFEPHI), and represented OFEPHI before the Ministry of Economy to
supervise YPF's privatization. He was also Minister of Economy and
Public Works of the province of Santa Cruz. Cameron graduated as an
industrial engineer in the National University of Bahia Blanca, in
the province of Buenos Aires, and holds a post-graduate energy
degree from the Instituto Tecnologico de Buenos Aires. Cameron is
51 years old, married, with three grown children.

WAYNE

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