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Argentina has doubled the price of the natural gas it sells to Chile, passing on the costs of a declining industry to its neighbor. This will only be a short-term fix, however, as Chile looks forward to a future of diversified natural-gas sourcing on the global market.

Chile announced July 14 that the price it pays for natural gas purchased from Argentina has increased 100 percent, from $7.80 to $15.90 per million British thermal units (Btu), including transportation costs. Chile will be paying $29 per million Btu. The move is an attempt by Argentina to shore up its declining natural gas sector by passing on the costs to Chile. The costs for Chile are high, since Argentina is its only source of natural gas, and Chile is already feeling the pinch of high global commodity prices.

Argentina’s decline in natural gas production has ended a 10-year honeymoon as an energy exporter. With natural gas making up 54 percent of Argentina’s energy mix, the country is extremely vulnerable to shortages. With declining production and declining exports from Bolivia, Argentina is struggling to pay for its natural gas imports.

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