The winter cold snap and the conflict in the Middle East have converged to produce a dire situation for Argentine industry. As residential gas demand escalates and import prices increase, numerous companies confront the possibility of halting operations, raising alarms throughout the manufacturing sector, as reported. Most small and medium-sized manufacturers that depend on gas for industrial processes acquire their supply via local distributors, who are mandated by law to prioritise residential customers. During periods of peak demand, industrial users are prioritised for supply cuts. Large industrial companies, including steelmakers, are directly linked to the primary gas transmission network via dedicated pipelines, thereby largely insulating themselves from these disruptions. The impact is primarily observed among smaller manufacturers that utilise the same distribution network as households. Industry utilises approximately 35 million cubic meters of gas daily, representing a portion of Argentina’s overall daily demand, which is around 120 million cubic meters.
Supply is derived from domestic production, chiefly at the Vaca Muerta shale oil and gas reservoir, alongside imported liquefied natural gas. Following the outbreak of hostilities between the United States and Iran, LNG prices for industrial users reportedly surged from approximately US$4 to US$24 per million BTU. As the national government retreats from its conventional responsibilities in overseeing energy resources, small enterprises find themselves confronted with two undesirable alternatives: either absorb international prices, which frequently exceed their financial capabilities, or halt production altogether. Market sources indicate that distributors are urging small-business customers to either cut back on petrol consumption or cease using the fuel entirely amid the cold spell. This action could potentially exert additional pressure on manufacturing activity. Petrol prices exhibit significant variation across the nation. In southern Argentina, where supply is sourced directly from Vaca Muerta, prices are maintained at approximately US$4 to US$5 per million BTU.
In the northern regions, elevated transportation costs exert upward pressure on prices, leading numerous companies to depend on imported LNG rather than pipeline gas. Industry sources indicate that the energy secretariat is promoting a market-driven approach, whereby small businesses would pay the current market price. The state has indicated that it does not intend to take action to avert supply disruptions. Under this approach, affordability is the primary concern, rather than availability. The situation highlights the necessity for increased investment in gas distribution infrastructure, as winter demand continues to reveal bottlenecks in the network that jeopardise industrial output. Argentina has encountered analogous challenges in the past. In 2005, the nation faced a gas crisis characterised by supply shortages, leading the government to halt exports to Chile, reduce deliveries to industrial consumers, and prioritise residential demand.
Combined-cycle power plants, which also depend on natural gas, experienced impacts as well. During that period, Argentina faced electricity shortages and escalated fuel oil imports to sustain power generation. Former Energy Secretary Emilio Apud indicated that the nation’s gas supply limitations are anticipated to alleviate by 2028, coinciding with the expected completion of several infrastructure projects currently underway. “When the cold arrives, pipelines cool and pressure drops, reducing the amount of gas that can be transported,” Apud said, explaining the technical impact of low temperatures. He added that companies holding interruptible gas contracts are anticipated to shoulder the primary impact of the supply cuts.