Argentina asks Petrobras to postpone payment for energy, say sources

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Thermal energy has to be paid by Argentina every 30 days, and the neighboring country wants to postpone it to every 180 days, said one of the sources, who spoke on condition of anonymity. Argentine President Alberto Fernández and President Lula in a meeting Ricardo Stuckert/Presidency of the Republic Petrobras received a request from Argentina to postpone payments in electricity contracts, and the oil company is evaluating the possibilities of exporting electricity, said two sources Brazilian companies aware of the discussions, told Reuters. A third person, on the Argentine side, confirmed that the order was made to Petrobras, which generates electricity through its thermal plants. Argentina is seeking better conditions to honor its financial commitments in view of the country’s economic difficulties, which, on the other hand, need energy to face the winter and heat homes. The request took place during a meeting between the presidents of the countries, Luiz Inácio Lula da Silva and Alberto Fernández, in Brasília, last week, in which the president of Petrobras, Jean Paul Prates, also participated, according to the newspaper “O Globo”, who published the information earlier. Lula and Janja welcome Argentine President Alberto Fernández and Fabiola Yáñez Thermal energy has to be paid by Argentina every 30 days, and the neighboring country wants to postpone it to every 180 days, said one of the sources, who spoke on condition of anonymity. “The energy sold is thermal. This energy sale for them varies a lot. It is not a firm contract. There are months that need a lot, there are months that need less”, said this source, without detailing volumes or values. This year, Brazil has been exporting electricity to Argentina and Uruguay mainly from hydroelectric plants, whose generation benefited from the favorable hydrological regime, which pressured domestic prices. Exports of hydroelectric energy to neighboring countries, which need to be paid in advance to the group of hydroelectric generators organized in the so-called “MRE” — unlike thermal energy, whose sale involves a bilateral contract — have taken place under a new modality that allowed the plants to monetize spillage, that is, water from the plants that would otherwise be wasted. Until April, this export of “turbinable flow” (EVT) yielded more than 466 million reais to the country, according to data from the Electric Energy Trading Chamber (CCEE). On Tuesday, the presidents of both countries should participate in a Mercosur meeting in Puerto Iguazú, Argentina. There was no immediate information on whether the energy issue could be addressed at any eventual bilateral meeting. Accept the risk? According to the newspaper “O Globo”, which heard from Argentine sources, the oil company could carry out its own financing scheme for its exports to the neighboring country. People heard by Reuters pointed out, however, that the chances of obtaining financing in this case are practically impossible, as financial institutions do not want to take the risk, given Argentina’s great financial difficulties. “No bank agrees to join,” said the second source, also on condition of anonymity. According to a market source with knowledge of the matter, there has still been no change in payment terms. In the case of thermal energy, as payments are not made in advance, the contracts are guaranteed by bank guarantees, and these letters of guarantee expire soon after the monthly settlements of the energy contracts. No extension of the term or change in the export contract has yet been registered, according to the source, who also noted that other obligations would have to be paid on time, such as payments of charges and energy transport, if Petrobras accepts the postponement of payment. Sought, Petrobras did not immediately respond to requests for comment. Relations without impositions The first source stated that despite the request having been made in a bilateral meeting between the presidents of both countries, there was no imposition for Petrobras to help. “It is not a government-to-government request, nor was there a vertical order. People ask, and whoever receives it evaluates and sees whether they have room to do it or not. This is a very sensitive case, not because of the policy itself, but because financially the Argentina is forcing the noose (around the neck),” he said. According to this source, Petrobras is assessing whether Argentina is able to mobilize guarantees of other financial natures. “‘Laguarantee soy yo’ doesn’t solve it,” he said.

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