Spain’s Repsol has cancelled its contract to supply Argentina with liquefied natural gas (LNG), just weeks after the country seized control of the company’s majority stake in YPF, a document obtained by Reuters on Friday showed.
Argentina relies on LNG imports to meet between 20 and 30 per cent of domestic natural gas consumption. The country will have to find a new supplier quickly to avoid energy shortfalls as demand peaks from June to September.
Repsol said in a letter to Argentine state energy company Enarsa, dated May 17, that Enarsa had breached the LNG contract by seeking to renegotiate the price of shipments and modify the timetable for deliveries.
Repsol had agreed to supply Argentina with 10 LNG cargoes this year. Earlier this month, an energy sector source said the Spanish company might halt the sales.
Enarsa’s conduct and the Argentine government’s “unlawful and discriminatory” takeover of YPF showed the country had “no intention of complying with, or continuing to be bound by, the agreement,” the letter stated.
Argentina has had difficulties securing LNG supplies as a result of tough price negotiations.