Argentina judge blocks top LNG supplier from tenders

Reuters

By Asher Levine and Oleg Vukmanovic

BUENOS AIRES/LONDON, Oct 16 (Reuters) - An Argentine federaljudge has blocked the country's top liquid natural gas (LNG)supplier, Spain's Gas Natural Fenosa, fromparticipating in tenders for the fuel, an Argentine consumerrights group said on Wednesday.

The ruling, first reported by local newspaper Clarin, couldcomplicate the energy-deficient nation's ability to keep itspower plants running.

Until a court rules on whether GNF has potential conflictsof interests, the company will be unable to participate intenders to provide fuel to the South American nation.

That includes a tender for 5.57 million tones of liquefiednatural gas, or 93 standard-sized shipments, for 2014 and 2015that Argentine state-run oil firm YPF has recentlylaunched, worth around $4.5 billion. The tender covers suppliesfor Argentina's two LNG import terminals, Bahia Blanca andEscobar.

The Argentine Consumers' Union filed a lawsuit sayinganother Spanish firm, Repsol owns a 30 percent share inGNF while also holding a stake in YPF, which brokers the fuelpurchases on behalf of fellow state-run energy company Enarsa.

As a result of the ruling, GNF stands to lose a contract todeliver 2.7 million tones of LNG into Argentina's Escobarterminal which it was widely tipped to win.

GNF is one of few global LNG suppliers that has the smallships needed to supply the river terminal, which is unable toreceive standard tankers due to water depth restrictions.

YPF appeared to be clearing the way for GNF to win theEscobar portion of the tender, several traders said, citingterms that appeared to favor the Spanish supplier.

YPF's decision to seek a single supplier for the Escobarterminal in the latest tender document, as well as changing howthe LNG supplies would be priced, led to widespread speculationamong traders that GNF was set to win this portion of thetender.

"GNF is more comfortable with Brent pricing," said onesource, citing its experience of handling oil-indexed gassupplies via the Algeria-Spain Maghreb pipeline. The pricing ofdeliveries into the Escobar terminal under previous tenders wasbased on U.S. gas prices, sources said.

If GNF is not able to deliver, it will pose significantlogistical challenges for YPF to find an alternative supplier,another source said.

GNF had no immediate comment.

"We don't have licenses here, we have a private, invite-onlycompetition," Fernando Blanco Muiño, president of the ArgentineConsumers' Union said. "It is not very transparent and not veryserious. We ask that they comply with national business laws."

Citing what he sees as a conflict of interests between YPFand GNF, Muino added that "we believe this violates the consumerrights law and the competition laws of our country."

A spokesman for YPF declined to comment.

Repsol holds an 11.82 percent stake in YPF followingArgentina's nationalization of Repsol's controlling assets inthe state-owned firm last year.

Fuel imports have been growing in Argentina due to apersistent fall in local production and an increase in demand,especially for gas.

Argentina's fuel imports rose 31.9 percent in August 2013from the same month last year. Led by liquid natural gaspurchases, imports totaled $942 million, according to data fromArgentina's energy secretary.

GNF was responsible for about 70 percent of the country'simports of the fuel this year and last, the paper said.

The company has been operating in Argentina since 1992through subsidiary Gas Natural BAN, which supplies the northernand western regions of Buenos Aires, the largest industrial areain the country.

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