TN PETRÓLEO

Canadian methanol producer Methanex`s (Nasdaq: MEOH) operations in southern Chile are running at 30% of capacity due to natural gas cuts from Argentina, a Methanex spokesperson told BNamericas.

Methanex does not expect the rate to rise in the short term.

"We`re only using gas from Chile at the moment," the official said. "It`s been nine months since we have even been able to buy Argentine gas."

Argentina cut gas exports to Chile during the last southern hemisphere winter.

Methanex Chile`s fourth quarter 2007 output totaled 288,000t compared to 766,000t in 4Q06. Production capacity is 960,000t.

Consequently, Methanex operations are unlikely to be affected in the short term by the Argentine government`s move to increase duties on exported natural gas from 45% to 100%, the spokesperson said.

The tax would rise to US$7/MBTU, according to a Methanex statement. As a result, consumers could end up paying close to US$10/MBTU for Argentine gas, according to press reports.

Methanex`s current gas contracts stipulate that its suppliers must pay any duties levied by the Argentine government.

"DISAPPOINTED"

"We are disappointed in the way the export duties were implemented as we believe it did not take into consideration the impact on the economy of southern Chile," Methanex Latin America senior VP Paul Schiodtz said in a statement.

"In addition, there is no excess pipeline capacity available to transport the gas from southern Argentina to the most populated regions of that country," he added.

US oil and gas company Apache (NYSE: APA) said last October that it was forced to shut in natural gas production in southern Argentina`s Tierra del Fuego province rather than export it to Chile.

Apache had to shut in 16M-20Mf3/d (up to 566,000m3/d) of production in Tierra del Fuego during the 2007 southern hemisphere winter because the pipeline from the area that runs north was already full, Apache CEO Steven Farris said last year.

"Argentina does not want us to export natural gas to Chile right now," Farris said. "We have to shut in production when the pipeline to the north is full rather than send it to Methanex."

Methanex`s long-term strategy is to source more gas from Chile.

"In that context, we expect new exploration projects in the Magallanes region by [Chile`s state oil company] Enap and other international oil and gas companies will continue to be developed with a sense of urgency," Schiodtz said.

Methanex is also collaborating with UK-based GeoPark in the search for new supplies from Chile. The E&P round for nine natural gas blocks in southern Chile`s Magallanes basin is expected to bring US$267mn in investment and major oil companies including France`s Total (NYSE: TOT) into the search for natural gas in Chile.