Argentina’s planned LNG exports have a favorable market

As Argentina’s plans to achieve large-scale LNG exports are taking shape, some analysts see favorable winds blowing in from the international market.

In a release, industry analyst Wood Mackenzie offers confidence in Argentina’s ability to position itself as an emerging source of gas supply to Asia during peak demand periods.

According to the report, global LNG demand is becoming more seasonal, with peak Argentine export capacity during the summer months coinciding with peak winter demand in Asia.

The analysis reinforces the idea that, given proper development, Vaca Muerta would produce enough gas to cover domestic demand, that of neighbors like Chile, and international exports.

Gas producers are already dropping production in summer because of an over-saturated local market and a lack of export infrastructure. The international LNG market would thus be the next logical step to sell surplus gas at better prices.

Also, theoretical Argentine liquefaction plants would have a lower cost to reach Asia than US units on the Gulf Coast. Additionally, they would avoid potential delays due to Panama Canal congestion.

Marcos Bulgheroni, CEO of Pan American Energy, described building a US$5bn LNG plant through a consortium of companies as “our only option” to reach markets for a fully developed Vaca Muerta formation.

As reported by BNamericas, another important factor is lowering production costs. As several projects with breakeven points below the current price of US$3/Mbtu enter full development in the next few years, Argentina should be well positioned to compete, the report says.

Wood Mackenzie estimates Argentina’s LNG production could reach 6Mt/y in 2024, increasing to 10Mt/y in 2030. The final breakeven price at the point of delivery would sit at around US$8/Mbtu.

A recent report by BNamericas analyses the state of the LNG market in Argentina and the region.