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Last Updated: Thursday, 1 April, 2004, 12:04 GMT 13:04 UK
Argentina energy crisis spreads
Rising domestic gas demand has forced Argentina to curb exports
Argentina has sharply reduced its gas exports in response to a domestic energy crisis, triggering serious shortages in neighbouring Chile.

Chile, which has few energy reserves of its own, faces a gas supply shortfall of 2.3 million cubic metres a day.

Senior Chilean officials have tried to dispel growing fears of energy price rises and compulsory rationing.

Economy minister Jorge Rodriguez said there were sufficient back-up supplies to avoid rationing.

However, he added that while there are laws in place to protect consumers, energy prices were beyond the government's control.

The shortages stem from Argentina's decision on Wednesday to limit gas exports to 2003 levels for the next five months.

Growing pains

The export curbs come in response to a 25% leap in domestic demand as economic growth accelerates sharply following a deep four-year recession.

Power supplies have also been depleted by a lack of rainfall, which has curbed hydroelectric production in the region.

Argentina's export ceiling has affected several Latin American countries, but Chile, which depends on its neighbour for 90% of its natural gas needs, has been hardest-hit.

Three gas-powered electricity plants in northern Chile face a 10.5% supply cut, according to Chilean officials.

Brazil, Venezuela and Bolivia have promised to help Argentina overcome its power crisis.

And earlier this week, Uruguay proposed that the Latin American trade bloc Mercosur - whose members are Brazil, Argentina, Uruguay and Paraguay - set up an energy bank to smooth over supply shortages.

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