Global Insider: Chile-Argentina Energy Relations

Argentina and Chile are considering entering into a long-term energy agreement. In an e-mail interview, Eric Farnsworth, vice president of the Council of the Americas, discussed Chile-Argentina energy relations.

WPR: To what degree have Argentina and Chile been energy partners in the past?

Eric Farnsworth: Chile has little in the way of its own traditional energy resources and has therefore long depended on Argentina for much of its energy supply, particularly natural gas. Under normal circumstances, Chile's natural partners on the energy side would be Bolivia and Peru, rather than Argentina, since the gas that Chile now obtains from Argentina actually originates elsewhere. But, as with many other sectors in Latin America, politics has intervened in the energy grid, and therefore Andean gas usually takes a circuitous route through Argentina in order to get to Chile. Though it seems crazy, the War of the Pacific from the late-19th century remains an obstacle to improved relations. In the meantime, Argentina's own energy-sector difficulties have translated into an uncertain supply for Chile, a scenario that is obviously untenable for Santiago. As a result, in addition to talking with Peru about obtaining gas for its mining sector, Chile has looked further afield for its natural gas resources, importing significant amounts of liquefied natural gas from Asia and elsewhere. The real losers in this scenario are the South American suppliers, who, because of politics, are losing a steady, growing, geographically close customer that pays its bills.

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