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Argentina ex-energy officials indicted on alleged LNG overpayments

Highlights

A federal judge in Argentina has indicted two former energy officials for alleged irregularities regarding LNG imports, a copy of the ruling showed.

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Judge Claudio Bonadio ordered Julio De Vido, the former minister of planning who oversaw national energy affairs from 2003 to 2015, and his former right-hand man, Roberto Baratta, to be held in custody awaiting trial, according to a 269-page ruling issued late Thursday.

Baratta, the ex-secretary of coordination and control of the Planning Ministry, was arrested late Thursday. De Vido couldn't be brought in because of immunity as a congressman.



The ex-officials, along with others, including former energy secretary Daniel Cameron, allegedly contracted some of the shipping infrastructure for importing LNG to two floating regasification terminals without a tender. They also failed to hold a competitive bidding process for prices of the imported product, meaning that above-market prices were paid, according to the ruling.

The alleged "fraud" between 2008 and 2015 cost the state Pesos 7 billion ($401 million), according to the ruling.

Argentina brought in nearly 500 cargoes to the terminals over that period, according to data cited in the ruling.

This came as dwindling gas production left the country short of gas, which meets half of national energy needs. Gas production plunged to a 16-year low of 113.7 million cu m/d in 2014 from a record 143 million cu m/d in 2004, as government-imposed caps on gas pricing discouraged investment.

Related Commodity Pulse video: US LNG exporters face fierce competition in an oversupplied market


REBUILDING GAS PRODUCTION


The new government of President Mauricio Macri, who took power in 2015, is trying to rebuild gas production by offering pricing incentives, tax breaks and other measures to develop huge unconventional plays like Vaca Muerta. This has helped increase output 7.3% to 122 million cu m/d this year, leading the authorities to scale back LNG imports.

According to Enarsa, the state company that handles gas imports, the plan for 2018 is to import less than the 67 or 68 cargoes due this year and the 77 in 2016 and 89 in 2015.

By 2020 or 2021, Enarsa wants to limit imports to the June to August winter months, allowing producers to export surplus output the rest of the year.

--Charles Newbery, newsdesk@spglobal.com

--Edited by Jonathan Fox, jonathan.fox@spglobal.com