Argentina's government may consider raising natural gas bills on households by less than a previously proposed 400% as it seeks to rebuild gas production to reduce imports, Cabinet Chief Marcos Pena said.
The government will pursue "the best scheme for gradualism" in raising gas tariffs, Pena said Saturday on Cadena 3, a radio broadcaster.
The government called the public consultation last week after the Supreme Court annulled its 400% hike implemented April 1, on grounds that hearings must come first to allow users a chance to voice their concerns before changes are made in what they are charged.
This was a blow for the right-of-center government of President Mauricio Macri, only nine months in office. His government wants to rebuild gas production and end chronic energy shortages, helping to reel in foreign investment to pull the economy out of recession.
To encourage drilling, Macri has doubled the wellhead price to an average of $5.20/MMBtu and kept in place an incentivized price of $7.50/MMBtu for output from new developments, like in shale and tight plays.
With higher gas distribution and transport tariffs, the government wants to cover more of the wellhead price from consumers, helping to reduce the strain on public finances through subsidies.
With more gas production, the government is seeking to cut imports, which hit a record of nearly 50 million cu m/d in June. The goal is to end purchases of liquefied natural gas -- half of total imports -- by 2021-22, the government has said.
Argentina's gas production rose 6.8% to an average of 121.4 million cu m/d in the first five months of 2016 from a 10-year low of 113.7 million cu m/d in 2014, according to Energy Ministry data.
