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What drove down natural gas production in Argentina?

Author

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  • Barril, Diego
  • Navajas, Fernando H.

Abstract

We address the causes behind the drop in natural gas production in Argentina since 2004, starting from a basic supply model that depends on economic incentives, and adding control variables related to different potential explanations such as firm specific (or area specific) behavior and the absence of contractual renegotiation of concessions extensions. Results from a panel of the change in natural gas production in all areas between 2004 and 2009 show that once a basic supply-past production (or reserve) relationship is modeled, other often mentioned effects become non-significant. Chiefly among them are firm specific effects and the role of renegotiations of concessions extensions. We find preliminary evidence that post 2007 renegotiations –which are associated with better price prospects- may have had an impact in correcting production decline in one leader firm. Other significant effects come from a negative impact of a change in the seasonality of production that in turn can be related to demand rationing and to price controls. Overall, the evidence suggests that the observed downcycle conforms to the prediction of a simple model of depressed economic incentives acting upon mature conventional natural gas fields and hindering investment in reserve additions or new technologies.

Suggested Citation

  • Barril, Diego & Navajas, Fernando H., 2011. "What drove down natural gas production in Argentina?," MPRA Paper 35726, University Library of Munich, Germany, revised Nov 2011.
    • Handle: RePEc:pra:mprapa:35726
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    References listed on IDEAS

    as
    1. Hancevic, Pedro & Cont, Walter & Navajas, Fernando, 2016. "Energy populism and household welfare," Energy Economics, Elsevier, vol. 56(C), pages 464-474.
    2. Krautkraemer, Jeffrey A. & Toman, Michael, 2003. "Fundamental Economics of Depletable Energy Supply," Discussion Papers 10842, Resources for the Future.
    3. Kenneth B. Medlock, 2009. "The Economics of Energy Supply," Chapters, in: Joanne Evans & Lester C. Hunt (ed.), International Handbook on the Economics of Energy, chapter 3, Edward Elgar Publishing.
    4. Joanne Evans & Lester C. Hunt (ed.), 2009. "International Handbook on the Economics of Energy," Books, Edward Elgar Publishing, number 12764, March.
    5. Pickering, Andrew, 2008. "The oil reserves production relationship," Energy Economics, Elsevier, vol. 30(2), pages 352-370, March.
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    Cited by:

    1. Diego Barril and Fernando Navajas, 2015. "Natural Gas Supply Behavior under Interventionism: The Case of Argentina," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4).

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    More about this item

    Keywords

    Natural gas; peak production; supply behaviour;
    All these keywords.

    JEL classification:

    • Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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