Argentina's state energy company Enarsa is again tendering to buy LNG supplies for 2012, after awarding only part of its prior tender because it found most prices too high, a source with the company said Tuesday.
Enarsa in early November launched the original tender for 80 cargoes, each of 138,000 cubic meters, receiving bids on the November 25 deadline for 60 of the cargoes.
It awarded "a little less than half" of the deliveries to suppliers including Japan's Marubeni, UK-based BP and the Spanish companies Gas Natural and Repsol, according to the source, who asked not to be named.
The source did not have full details on winners, but said Gas Natural won a contract to deliver 70% of the supplies to the Escobar floating LNG terminal upriver from Buenos Aires with a "competitive price."
The other 30% of the supplies for Escobar were not awarded, because the other bidder in line for the contract offered a price thought too high, he said.
Enarsa set the cutoff price at a premium of $13/MMBtu over the US' Henry Hub, or about $16.20-$16.50/MMBtu, he said. That is around the highest price the country paid in 2011 for LNG supplies.
Bids by Morgan Stanley and other suppliers were rejected, he said.
Other bidders in the first round were Brazil's Petrobras and Texas-based Excelerate Energy.
Enarsa will now seek suppliers for around 35 cargoes rejected in the first tender, the source said, adding the company will name the winners of the remaining cargoes December 14.
"There is sufficient gas in the world for the prices to be lower," the source added.
The source said he suspects some bidders may have offered higher prices to account for an alleged increase in the risk of doing business with Argentina.
The national government over the past six weeks has stepped up capital controls and trimmed state subsidies on public services including gas consumption. The moves, which are expected to deepen, are aimed at stemming a decline in hard-currency reserves to safeguard state finances against a prolonged downturn in the global economy, which could see reduced demand for Argentina's exports.
Argentina is heavily reliant on tax revenue and international reserves to cover expenditures and debt payments. Any reduction in these raises concerns about its capacity to pay for imports like LNG.
It also does not have easy access to global credit markets because of the higher credit risk associated with it after the country defaulted on $100 billion in debt in 2001. While it has settled much of the debt, its creditworthiness remains tainted.
