When it comes to Argentina, your mind may muster images of tango rather than Contango. Without a doubt, the country's energy markets are far less elegant than its national dance -- so much so that one of the major operators is thinking about bowing out.

Amid an uncertain regulatory environment, natural gas investment in Argentina has badly lagged the country's industrial rebound. Price controls have been in place since the country's economic swoon, and been maintained at such a low level that a lot of coal and oil users have switched to the cheaper fuel. Amazingly, shortages have ensued. This is affecting not only Argentinean energy consumers, but neighboring Chile as well.

Gasoline prices have also been kept artificially low over the past few years by the government of President Nestor Kirchner. Rather than providing marketers like ExxonMobil (NYSE:XOM), Petrobras (NYSE:PBR), and Royal Dutch Shell (NYSE:RDS-A) (NYSE:RDS-B) the carrot of market-clearing prices that would eliminate excess supply and excess demand, the government wields a nasty stick -- meet your supply quota, or we'll toss your fat-cat execs in the slammer.

Exxon, which operates under the Esso moniker, is reportedly thinking about calling it quits. It wouldn't be the first foreign player to do so. Last year, Pioneer Natural Resources (NYSE:PXD) sold its significant holdings to Apache (NYSE:APA).

While the latter company has averaged about $1 on its natural gas price realizations in Argentina, it says that the country "is starting to work." But even Apache's market-priced contracts don't look all that appealing today, and I'm going to need more convincing that the Argentinean energy sector is really a good place to put shareholder money.

Related Foolishness:

  • Shell has also experienced rough handling over in Russia.
  • With a near-monopoly back at home, Petrobras can't be squirming too much.
  • I've recently questioned whether it's time to jump on Apache.

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Fool contributor Toby Shute doesn't have a position in any company mentioned. Petrobras is an Income Investor selection. The Motley Fool's disclosure policy prefers the carrot to the stick.