by Martín Gesualdi, Tecnolatina S.A, Suipacha 1111, Buenos Aires, Argentine, Phone/Fax , 1

Introduction Argentine Natural Gas Market Power Market Proposal Results Conclusions 2

FIXED AND LOW RATES INSUFFICIENT INVESTMENTS FOR EXPLORATION AND DEVELOPMENT HIGH GROWTH RATES OF NATURAL GAS DEMAND NATURAL GAS RESERVES DECLINING NATURAL GAS PRODUCTION DECLINING DOMESTIC PRODUCTION OF NG UNABLE TO SUPPLY LOCAL DEMAND POWER PLANTS FORCED TO IMPORT LIQUID FUEL TO REPLACE THE LACK OF NG NEED TO IMPORT NATURAL GAS INCREASE GHG EMISSIONS NEGATIVE IMPACT IN ARGENTINE ENERGY TRADE BALANCE 3

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Argentine NG production declining, as a result of the lack of incentives to invest, had become the main important problem of energy market. Reserves of NG also went down as a consequence of the lack of investments in exploration and development - 15% 5

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PROPOSAL THEORICAL ANALISIS - Example 2012 PROPOSAL Replacement of average stoves by efficient air conditioner-split to heat homes 35 MMm3/d of NG Argentine Thermal Park (2300 kcal/kwh) 142 GWh Allows to heat 8 MM of homes Average NG residential consumption: 38 MMm3/d CONSIDERING 2012 ARGENTINE POWER MATRIX 17 MMm3/d 142 GWh Allows to heat 8 MM of homes SAVINGS: 21 MMm3/d Estimate: 1,100 MM of usd per year 11

To increase residential NG price. To subsidize electrical devices for heating To forbid the use of NG in new buildings EXPECTED BENEFITS Less emission Greater available gas for industrial consumption More NG available for Power Generation Less Import Energy Trade Balance surplus. Higher natural gas wellhead price received by producers 12

By 2017 Nonconventional gas will already be part of the energy matrix. Average Annual rate of demand growth of power and gas of 4 %. Progressive reduction of NG Imports. Reduction of residential NG consumption for heating. Diversification of Power Matrix. New electrical plants Growth of residential power demand in winter. 13

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The replacement of argentine natural gas residential consumption by electricity will: Increase the availability of supply to the Industry. Reduce to 0 the use of liquid fuels. Reduce Greenhouse Gases Emissions. Turn positive Energy Trade Balance. 16

THANK YOU 17