Latin America struggles with energy cost – Fitch

08 January 2008 23:20  [Source: ICIS news]

HOUSTON (ICIS news)--Latin America this year will struggle with high energy costs and the risk of blackouts throughout the region, according to a special report issued on Tuesday by Fitch Ratings.

“Many countries throughout the region are grappling with tight electric reserve margins and high spot prices,” said Gianna Bern, senior director in Fitch's Latin America Corporates Group. “In many cases, the strength of regulatory regimes is being tested as governments try to keep end-user prices down, yet still encourage investment.”

Brazil and Argentina are both stretched thin on natural gas and electricity supplies, as reported by ICIS news. According to Fitch, recent policies in some markets have helped push forward energy projects to diversify the countries' energy mix, which should stave off near- and medium-term electricity shortages.

“The winter of 2008 could be challenging in the Southern Cone,” Bern said.

Argentina will continue to face difficulties meeting its export obligations in 2008, the report said. Methanex has two methanol production lines in Chile that remain idle due to the shortage of gas feedstock from Argentina.

“Chile is aiming towards energy self sufficiency after Argentine gas curtailing left the country exposed to significantly higher cost fuel supply alternatives,” the Fitch report said.

Brazil plans to meet its own strong demand for electricity through hydro resources, according to the report, which can be accessed via Fitch's website.

By: John Waggoner
+1 713 525 2653

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