Argentina is in the grips of a natural gas emergency: its gas demand is skyrocketing while its production levels and transportation infrastructure lag seriously behind. The country is looking at serious gas and electricity shortages this coming winter, although it is stepping up gas imports from Bolivia to help meet projected demand. In response to the crisis, the Argentine government of President Nestor Kirchner has created a national energy company as part of a newly unveiled energy program. Energia Argentina SA (Enarsa), the state entity, will explore for and develop oil and gas resources, transmit and distribute electric power and natural gas, and engage in mining activities. Through Enarsa, the government plans to spend $3.8 billion during the next five years to build gas pipelines and hydroelectric projects, complete a nuclear power plant and improve the country's electricity grid. To help pay for these upgrades to its energy infrastructure, Argentina is raising export duties on oil from 20% to 25% and on liquefied petroleum gas from 5% to 20%. It will also begin taxing gasoline exports at 5%. The export duties were first levied in early 2002 and were set to be phased out in 2007; about 20% of Argentina's energy production is currently exported. The government is also raising the wellhead price for gas, allowing it to immediately jump 35%. It has several more increases scheduled throughout the coming year as well. According to Edinburgh, Scotland-based research firm Wood Mackenzie, the creation of Enarsa will not have an immediate impact on the current gas shortages. "It will take many years to fully establish the new entity, explore for, discover and develop new reserves," says Pauline Geddes, a WoodMac consultant. Nonetheless, the industry will benefit from improvements to the gas infrastructure and the eventual deregulation of the gas sector.
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