The vessel, with a crew of 44 members, has been missing since it went silent on the radio almost two weeks ago while traveling off the coast of Northern Patagonia.
He said the water entered through the ventilation system to a battery connection tray in the prow and "caused a short circuit and the beginning of a fire, or smoke without flame".
November 15, 12:30 a.m.: The sub's captain calls his land-based commander by satellite phone, saying that seawater has entered the vessel's "snorkel", a tube that reaches the surface to refresh the vessel's air and recharge the batteries.
Water in the snorkel of the ARA San Juan short-circuited the battery system before an explosion and the vessel's disappearance, according to naval officials.
"Officially we do not have any news about that", Balbi said.
The navy said last week that, before the submarine went missing, the captain reported an electrical problem in a battery compartment and the vessel was ordered to return to its base in the coastal city of Mar del Plata, about 250 miles southeast of Buenos Aires.
"They had to isolate this battery and follow the water in Mar del Plata using a different battery", Balbi said.
GETTY HOPE Family members are still holding out that their loved ones may be alive
The final contact with the ARA San Juan, which has 44 crew members on board, was on November 15 -the day the vessel vanished. The banner below reads "God, give strenght to the submariners".
In the days after the submarine went missing, the Comprehensive Nuclear Test-Ban Treaty Organization, which listens for secret atomic blasts, said it heard a noise from underwater that may have been the result of the submarine's implosion.
Argentine navy officials say the submarine was checked just days before sailing and was deemed to be in good shape and ready for its voyage. Authorities said they had not confirmed any sort of explosion on the craft but said they were looking into the possibility. Others, however, are not sure.
Family members of the crew, however, have told local media outlets the submarine was in poor shape. I love him. I adore him.
"According to them, they only found out about the explosion now, but who is so stupid to believe that?"
"We are at a stage of hope and hopelessness at the same time", Balbi told reporters. The last known communication from the submarine reportedly discussed a battery failure.
The Argentine military submarine ARA San Juan and crew are seen leaving the port of Buenos Aires, Argentina, Jun. 2, 2014.