Argentina Smooths Gas Bill Hikes With Extended Payment Plan

Argentina's government is employing a familiar strategy to cushion the blow of rising imported gas prices, aiming to prevent a sudden shock to consumer bills. The cost of gas imported via ship has always exceeded that extracted from local wells, a disparity that has widened exceptionally this year due to the Middle East conflict.

To manage this increase, the government is adopting a "flatten the curve" approach, similar to YPF's method for dosing gasoline and diesel price hikes. This involves modifying how daily accumulated differences (DDA) are calculated, which translate the real cost of gas at the point of entry into the transport system to the tariff. Previously seasonal, concentrated in winter when imports peak, these adjustments will now be made every two months by the National Gas Regulatory Entity (Enargas) starting in August.

The objective is to avoid what the Secretariat of Energy terms the “double seasonal effect”, when rising consumption and higher imported gas prices hit bills simultaneously during the coldest months. "To provide greater predictability and stability to the consumer, we try to make the bill as flat as possible, ensuring differences are reflected more periodically and with less seasonality," explained Secretary of Energy María Tettamanti.

While the underlying mechanism remains the same, consumers will eventually pay the difference between local and imported gas, the frequency of adjustment changes. This approach aims to dilute the impact into smaller, more spaced-out installments rather than a concentrated surge. This is akin to YPF's strategy of spreading international oil cost increases over time rather than immediately passing them on.

Domestic gas costs around US$4 per million British thermal units (BTU) at the wellhead in winter. However, imported liquefied natural gas (LNG) has recently reached US$23 per million BTU, driven by Middle East tensions and partial closures of the Strait of Hormuz. With the expanded Nestor Kirchner gas pipeline now operational, the government anticipates needing less LNG in future winters. Imports could drop from 23 ships this year to between 10 and 11 next year. Tettamanti noted that future purchases should be handled by the private sector, which must assume real costs and make efficient decisions.