The winter cold snap and the war in the Middle East have combined to create a worst-case scenario for Argentine industry. As residential gas demand surges and import prices climb, many companies face the prospect of suspending operations, raising concerns across the manufacturing sector, according to the Herald‘s sister publication Ámbito.
Most small and medium-sized manufacturers that rely on gas for industrial processes purchase their supply through local distributors, which are legally required to prioritize residential customers.
During periods of peak demand, industrial users are the first to face supply cuts.
Large industrial companies, including steelmakers, are connected directly to the main gas transmission network through dedicated pipelines and are largely shielded from these disruptions.
The impact is concentrated among smaller manufacturers that share the distribution network with households.
Industry consumes an estimated 35 million cubic meters of gas per day, out of Argentina’s total daily demand of roughly 120 million cubic meters.
Supply comes from domestic production, primarily at the Vaca Muerta shale oil and gas reservoir, as well as imported liquefied natural gas (LNG).
Following the outbreak of hostilities between the United States and Iran, LNG prices for industrial users reportedly jumped from around US$4 to US$24 per million BTU.
With the national government stepping back from its traditional role in managing energy resources, small businesses are left with two unpalatable options: pay international prices — often beyond their reach — or suspend production.
Concern across the industry
According to market sources, distributors have begun asking small-business customers to reduce gas consumption or stop using the fuel altogether during the cold spell, a move that could further weigh on manufacturing activity.
Gas prices also vary widely across the country. In southern Argentina, where supply comes directly from Vaca Muerta, prices remain around US$4 to US$5 per million BTU. In the north, however, higher transportation costs push prices up, and many companies rely on imported LNG instead of pipeline gas.
Industry sources say the energy secretariat is advocating a market-based response, under which small businesses would simply pay the prevailing market price. The state, they say, does not plan to intervene to prevent supply disruptions.
Under this approach, availability is not the main issue — affordability is. The situation also underscores the need for greater investment in gas distribution infrastructure, as winter demand continues to expose bottlenecks in the network that threaten industrial output.
Argentina has faced similar problems before. In 2005, the country experienced a gas crisis driven by supply shortages, prompting the government to suspend exports to Chile, cut deliveries to industrial users, and prioritize residential demand.
Combined-cycle power plants, which also rely on natural gas, were affected as well. At the time, Argentina experienced electricity shortages and increased fuel oil imports to keep power generation running.
An expert’s view
Former Energy Secretary Emilio Apud told Ámbito that the country’s gas supply constraints should ease by 2028, when several infrastructure projects currently under construction are expected to be completed.
“When the cold arrives, pipelines cool and pressure drops, reducing the amount of gas that can be transported,” Apud said, explaining the technical impact of low temperatures.
He added that companies holding interruptible gas contracts are expected to bear the brunt of the supply cuts.