UPDATE 1-Argentina judge blocks top LNG supplier from tenders

Wed Oct 16, 2013 3:15pm EDT

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By Asher Levine and Oleg Vukmanovic

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

The ruling, first reported by local newspaper Clarin, could complicate the energy-deficient nation's ability to keep its power plants running.

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

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

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

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

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

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

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

"GNF is more comfortable with Brent pricing," said one source, citing its experience of handling oil-indexed gas supplies via the Algeria-Spain Maghreb pipeline. The pricing of deliveries into the Escobar terminal under previous tenders was based on U.S. gas prices, sources said.

If GNF is not able to deliver, it will pose significant logistical 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-only competition," Fernando Blanco Muiño, president of the Argentine Consumers' Union said. "It is not very transparent and not very serious. We ask that they comply with national business laws."

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

A spokesman for YPF declined to comment.

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

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

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

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

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

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