5 bid for Vaca Muerta gas pipeline construction

A tender for a contract to build the first phase of Argentina’s Vaca Muerta gas pipeline project attracted five bidders.

The work would support increased dispatch from the unconventional hydrocarbons play and – in turn – substitute costly imports and help expand coverage. 

The price tag of the publicly funded first phase is around US$1.6bn, according to a presentation published last year.

First phase work involves laying 680km of pipe, which would be used for the main duct and ancillary projects such as the Mercedes-Cardales link.

The construction work bidders are local firm BTU; a consortium formed by Argentine-Italian group Techint and local firm Sacde; local gas transporter TGS; local construction firm Esuco; and a consortium formed by local players Víctor Contreras and Contreras Hermanos.

Ahead of the bid-opening ceremony on Friday, federal energy secretary Darío Martínez said the duct was the country's most important gas project of the past 40 years. Officials want the first phase built by around the middle of next year, a target seen as a major challenge but achievable. Newly appointed economy minister Silvina Batakis urged “teamwork.”

State company Energía Argentina, which is managing the project, and manufacturer Siat recently signed a contract for the provision of pipes. Processes for components such as valves and measuring equipment are also underway. 

The work will permit a 25% increase in the capacity of Argentina’s national gas transport system, Energía Argentina said in a statement.

A fourth round of Argentine gas production incentives program Plan Gas is on the way to secure additional gas needed to fill the pipeline, Martínez said recently, echoing comments made in March by energy firm Pampa Energía. 

OIL PIPELINES

In related hydrocarbons news, Omar Gutiérrez, governor of Argentina’s Neuquén province, said 15% of the jurisdiction’s oil output was being exported. 

During an event hosted by local media outlet Diario Río Negro, Gutiérrez added that about 3-5% of gas was being exported and that, given output growth, “not one but five gas pipelines are needed.”

A mothballed Argentina-Chile oil export pipeline is being brought back online and due to enter the testing phase in August. In parallel, calls have been made for construction of a 36,000m3/d (226,443b/d) duct to transport more Vaca Muerta oil to Buenos Aires, local media outlet EconoJournal recently reported. A 10-year extension to concessionaire Oldelval’s license – currently due to expire in 2028 – would advance the 342km project, it said. Oldelval has already invested to boost transport capacity.

In May, production of unconventional oil and gas hit a record high in Argentina. Neuquén is home to most of the Vaca Muerta shale play, which has been driving national hydrocarbons growth.

Nationally, overall oil output averaged 584,000b/d in May, up 14% year-on-year, as gas grew 12% to 136Mm3/d. Unconventional oil output averaged 241,000b/d, up 57% year-on-year, while unconventional gas production was 76Mm3/d, up 39% year-on-year.

Neuquén’s goal is to reach 700,000b/d oil by 2030. The province’s target for this year is 308,000b/d. Production in April was around 265,000b/d, according to data from the province’s energy and natural resources ministry. 

PIAP

Investment of 10bn pesos (US$78.9mn) is needed in 2022-23 to bring the country’s PIAP heavy water plant, located in Neuquén, back online, said Gutiérrez. 

Argentina is currently importing the water, used at nuclear plants, from Romania.

Neuquén and nuclear commission CNEA officials are also in talks on diversifying output to encompass hydrogen, ammonia and fertilizers, among other products, Gutiérrez said, adding they were also looking at financing options.