VZCZCXYZ0000
RR RUEHWEB

DE RUEHBU #0407/01 0922130
ZNR UUUUU ZZH
R 012130Z APR 08
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 0616
INFO RHMFIUU/DEPT OF ENERGY WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHMFIUU/HQ USSOUTHCOM MIAMI FL
RUCNMER/MERCOSUR COLLECTIVE

UNCLAS BUENOS AIRES 000407 
 
SIPDIS 
 
SIPDIS 
SENSITIVE 
 
TREASURY FOR LTRAN AND MMALLOY 
E FOR THOMAS PIERCE 
PASS USTR FOR DUCKWORTH 
USDOC FOR 4322/ITA/MAC/OLAC/PEACHER 
US SOUTHCOM FOR POLAD 
 
E.O. 12958: N/A 
TAGS: ENRG EPET ECON PINR AR
SUBJECT: ARGENTINA: ENERGY SECRETARY ON WIREC, GOA ENERGY 
CONSERVATION AND NATURAL GAS PRODUCTION INCENTIVES 
 
REF:  (A) Buenos Aires 356 
      (B) Buenos Aries 131 
      (C) Buenos Aires 19 
 
This cable contains business-sensitive information - not for 
internet distribution. 
 
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Summary 
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¶1. (SBU) Argentina will consider making a renewable energy pledge 
following its participation in the Washington WIREC conference, 
according to GoA delegation head Energy Secretary Cameron.  He noted 
to Ambassador Argentina's recently implemented energy conservation 
measures and the GoA's passage of a biofuels law in 2007 that 
provided tax incentives for biodiesel and ethanol production and 
mandates that biofuels contribute 5% of the domestic fuel mix by 
¶2010.  Cameron also highlighted the GoA's recently announced "Gas 
Plus" initiative (designed to incent new natural gas exploration by 
authorizing higher prices for natural gas obtained via new or 
hard-to-reach gas reserves) but emphasized that a determination of 
"appropriate" gas pricing to promote exploration and development 
will remain contentious.  Argentina remains committed to 
participating in the construction of LNG regassification plants in 
Uruguay and in Argentina (jointly with Venezuela's PDVSA) and plans 
to temporarily position a leased LNG regassification ship in a 
Buenos Aires province port to ensure adequate natural gas supplies 
for domestic industry and home heating during the upcoming (austral) 
winter season peak demand period.  Argentine exports of natural gas 
to Chile will "normalize" in the coming months, Cameron said, but 
alleviating constraints on U.S. energy company Apache Energy's 
production of gas in Tierra del Fuego province will have to wait on 
the construction of a second gas pipeline from Tierra del Fuego to 
the mainland, expected in 2-3 years.  End Summary. 
 
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WIREC: Seeking an Argentine Pledge 
---------------------------------- 
 
¶2. (SBU) On March 28, Ambassador met with GoA Planning Ministry 
Energy Secretary Daniel Cameron to review the Secretary's 
participation as the head of the GoA Del to the Washington WIREC 
renewal energy conference, to encourage the GoA to make a WIREC 
International Action Program pledge by the April 4 deadline, to 
discuss current GoA energy sector initiatives, and to highlight U.S. 
upstream player concerns about declining profitability and 
regulatory constraints.  (Ambassador had previously met with Cameron 
in August 2007 to present him a letter from U.S. Secretary of Energy 
Bodman inviting him to a Vienna meeting of the Global Nuclear Energy 
Partnership -- GNEP -- and inviting Argentina to become a GNEP 
partner.) 
 
¶3. (U) While WIREC conference reports noted no/no substantive GoA 
interventions, Cameron praised conference organization, President 
Bush's remarks calling for free trade in renewable energy 
technology, and the EU's presentation on their 20/20 renewable 
energy initiative.  He noted the GoA's recently implemented energy 
conservation measures (Ref C) and the earlier passage of a biofuels 
law in 2007 that provided tax incentives for biodiesel and ethanol 
production and mandates that biofuels contribute 5% of the domestic 
fuel mix by 2010.  The GoA remains concerned, he said, about the 
broad impact of global biofuels development on basic food prices. 
 
¶4. (SBU) Ambassador noted that more than 100 voluntary WIREC pledges 
have been received to date, a clear demonstration of how far and 
fast renewable energy has come into the energy mainstream since the 
Bonn 2004 renewable energy meeting.  He encouraged Cameron to 
consider making an Argentine pledge as part of the Washington 
International Action Program by the April 4 deadline. Cameron was 
unaware of Brazil's pledge to maintain a 45% renewably generated 
share of its total energy supply and an 80% renewable energy share 
in electricity generation.  He asked if Embassy could provide him 
details on WIREC pledges made to date.  Cameron noted the short 
deadline, but offered to consider an Argentine pledge. (EconCouns 
subsequently provided Cameron a list of all country pledges.) 
 
--------------------------------------- 
GoA Energy Initiatives and Winter Plans 
--------------------------------------- 
 
 
5.(SBU)  Ambassador questioned implementation of the GoA's recently 
announced "Gas Plus" initiative (designed to encourage new natural 
gas exploration by authorizing higher prices for natural gas 
obtained through new or untapped, hard-to-reach gas reserves - Ref 
A) and noted that our U.S. industry contacts call its more 
market-oriented pricing approach a step in the right direction. 
Cameron agreed that the Gas Plus program would encourage some 
incremental domestic production, but emphasized that "appropriate" 
pricing to encourage new natural gas exploration and development 
will remain a contentious issue for some time.  Unlike oil, he said, 
75% of global natural gas production is consumed locally and a 
global commodity market for any gas other than LNG (7% of the global 
natural gas market) has yet to be developed.  Argentina remains 
committed to participating in the construction of an LNG 
regassification plant in Uruguay and a second regassification plant 
in Argentina jointly with Venezuela's PDVSA.  In addition, 
Argentina's national hydrocarbon company, ENARSA, has contracted 
with Repsol/YPF (Argentina's largest integrated energy producer) to 
temporarily position an LNG regassification ship in the Buenos Aires 
province port of Bahia Blanca to help ensure adequate natural gas 
supplies will be available to meet the needs of domestic industry 
and consumer home heating during the upcoming (austral) winter 
season peak demand period.  Finally, he noted that Argentina remains 
committed to build a second Argentina/Bolivia gas pipeline and 
linked cyclic hydrocarbon extraction plant (Ref B). 
 
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Apache in Tierra Del Fuego 
-------------------------- 
 
¶6. (SBU) Ambassador noted U.S. firm Apache Energy's investment of 
over $125 million in Tierra del Fuego province since acquiring 
properties there from Pan American Energy in 2006/7. (Apache has 
drilled eight gas wells and made two new gas field discoveries, 
helping it achieve over 20 million cubic feet per day of new gas 
production.)  However, the GoA's decision to cut gas exports to 
Chile from Tierra del Fuego has "stranded" large volumes of natural 
gas there pending a planned expansion of the gas pipeline that 
connects Tierra del Fuego with the Argentine mainland. 
Over-injection into the existing Tierra del Fuego gas pipeline by 
Petrobras and Total has forced Apache to re-inject 60 million cubic 
feet of natural gas per day into the ground, a loss to the company 
and to GoA export revenues.  Cameron said he was aware of the 
situation and had met a number of times with Apache management. 
Argentine exports of natural gas to Chile will "normalize" in the 
coming months, he said, but a full resolution of Apache's problem 
will have to wait on the construction of a second gas pipeline from 
Tierra del Fuego to the mainland, expected in 2-3 years. 
 
-------- 
Bio Note 
-------- 
 
¶7. (U) Daniel Omar Cameron was appointed Planning Ministry Secretary 
of Energy by President Nestor Kirchner in May 2003.  He is 
considered close to both Nestor and current president Cristina 
Fernandez de Kirchner.  Cameron's entire professional career has 
focused on the energy sector and, prior to his current position, he 
served as member of the Administrative Committee of the Federal 
Power Transportation Trust Fund and member of the Committee of the 
Electric Power Federal Council, representing the province of Santa 
Cruz.  He was also member of the (then GoA-owned) integrated 
hydrocarbon producer YPF's Board of Directors, where he represented 
hydrocarbon producing provinces.  Cameron was the Executive 
Secretary of the Organization of Hydrocarbon Producing States 
 
SIPDIS 
(OFEPHI), and represented OFEPHI before the Ministry of Economy to 
supervise YPF's privatization.  He was also Minister of Economy and 
Public Works of the province of Santa Cruz.  Cameron graduated as an 
industrial engineer in the National University of Bahia Blanca, in 
the province of Buenos Aires, and holds a post-graduate energy 
degree from the Instituto Tecnologico de Buenos Aires.  Cameron is 
51 years old, married, with three grown children. 
 
WAYNE