* Energy sector beset by high demand, low investment
* Gov't keen to develop shale energy resources
BUENOS AIRES Nov 28 Argentina will allow
wellhead natural gas prices to rise substantially from current
levels as the energy-hungry South American country seeks to
attract foreign investment into new fields, President Cristina
Fernandez said on Wednesday.
Fernandez, who is keen to lure private investment to bring
hefty shale energy resources on stream, said wellhead prices
would rise to $7.50 per million British Thermal Units (BTU).
The current price ceiling is about $5 per million BTU,
although prices at the wellhead average about $2.50 per million
BTU in the Neuquen basin in southern Argentina, the country's
main production zone. Lower price caps had been part of a policy
of supporting local industrial energy users.
"We've decided to give incentives for gas production,"
Fernandez said, adding that the new price would be available for
all energy companies that invest to develop new fields in the
South American nation.
The government earlier this month vowed to increase consumer
prices for natural gas and electricity as state-controlled
energy company YPF hopes to lure partners to
invest in the Vaca Muerta shale site, which may hold enough
resources to double Argentina's oil and natural gas output.
A U.S. Department of Energy report shows Argentina holds
more natural gas trapped in shale rock than in all of Europe - a
774-trillion-cubic-feet bounty that could transform the outlook
for Western Hemisphere supply.
Local energy sector analyst Victor Bronstein said the new,
elevated price should attract international investment.
"This was a piece of news that was expected and necessary,"
YPF and U.S.-based Chevron Corp have already signed
a deal to consider jointly exploring for shale oil and natural
gas in Vaca Muerta.