Argentina: Oil Price Slump Will Help Cut its Energy Bill

The slump in global oil prices will reduce Argentina's energy import bill, the country's economy minister said on Wednesday, easing pressure on the central bank's strained foreign reserves.

The economy minister, Axel Kicillof, told industry leaders at a conference that he projected an energy deficit of $7 billion to $8 billion this year, amounting to roughly one quarter of the country's hard currency reserves, which stand at just under $29 billion.

Argentina defaulted on its debt for a second time in 12 years in July, exacerbating pressure on the foreign reserves at a time it faces a shortage of hard currency because of trade and currency controls and a stagnating economy.

"The fall in prices is going to reduce the burden on the state's fuel purchases from abroad," Kicillof told Reuters on the sidelines of the conference in Pilar, which is located on the outskirts of Buenos Aires.

Asked to put a figure on the reduction, Kicillof said the government was still crunching the numbers. "There's a lot of uncertainty internationally over how this is going to pan out," he said.

Argentina produces 90 percent of its energy needs, according to government data, and imports the difference. Last year Argentina's energy import bill amounted to $11.4 billion while energy exports netted $5.6 billion.

Argentina has the world's second largest shale gas resources and fourth largest shale oil resources, but officials say the financing needed to exploit them is beyond the reach of state-controlled energy firm YPF and regional governments.

YPF forecast in September it would take Argentina up to a decade and as much as $200 billion in investment to develop its nascent shale sector and erase its energy output deficit.

Chevron Corp, Petronas, Royal Dutch Shell (RYDAF) and Total have dipped their toes in but their initial investments fall short of putting Argentina on the path to energy independence.

Reporting by Nicolas Misculin; Writing by Richard Lough