Argentina oil watch: TGS pipeline contract, Tecpetrol wind unit, bioethanol price

The board of Argentine natural gas transport company TGS accepted a bid for a construction contract, according to a regulatory filing.

The offer – submitted by local engineering firm SACDE – is for a project in Neuquén province. 

Work involves adding 32km of 30-inch pipe to the Vaca Muerta Norte duct, the provincial government said previously.

The extension, with a price tag of US$60mn, will run between areas Toldos I and El Trapial and support production at the Vaca Muerta formation.

Output of unconventional oil and gas at Vaca Muerta has been climbing apace, straining capacity of existing infrastructure. Several initiatives are underway to boost dispatch capacity, including the Vaca Muerta gas pipeline ‘megaproject’, the overhaul and recommissioning of an Argentina-Chile oil export pipeline, and the increase of pumping capacity of a domestic oil duct that carries crude to the Puerto Rosales terminal.

TGS has said previously that the execution of midstream projects hinged on the progress of the megaproject. 

The company transports about 60% of the gas consumed in the country, through more than 9,100km of pipelines.

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Argentine upstream player Tecpetrol has offloaded wind power subsidiary Parque Eólicos de la Buena Ventura (PEBV) to a sister company.

Under the US$4mn transaction, PEBV was transferred to steel tube producer Siderca, Tecpetrol said in a regulatory filing. 

Both Tecpetrol and Siderca are units of Italian-Argentine industrial group Techint. 

PEBV has requested permission to incorporate a planned 105MW wind farm into the country’s wholesale power market. The green light is sought for the de la Buena Ventura project, earmarked for the locality of Adolfo Gonzáles Chaves in Buenos Aires province.

The project was also granted 101MW of dispatch priority by wholesale power market administrator Cammesa in a round for plants seeking to participate in Mater, a term market that allows large users to directly contract power supply from renewables players. 

Last year Tecpetrol bought the shares that ABO Wind Energías Renovables and ABO Wind AG held in PEBV.

The price tag of the project was US$131mn, local press reported at the time.

Turbine delivery is planned for 3Q22 whilst commissioning is expected for 3Q23, Danish supplier Vestas said.

Tecpetrol, which produces around 14% of Argentina's gas, has been investing in the Vaca Muerta formation. The company, along with other upstream firms, has announced a general emissions-reduction focus.

Gas production at Vaca Muerta was 45.5Mm3/d in January, up 69.5% year-on-year. Tecpetrol was the No. 2 player after national oil company YPF.

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Argentina’s federal energy department has hiked the price of bioethanol that is used for blending with gasoline. 

In a resolution, the department set a price of 73.1 pesos (US$0.65) a liter for ethanol produced from sugarcane and from corn.

The prices will remain in place until officials update them, according to the resolution.

Officials had a set a price of 65.4 pesos a liter in February. 

The government introduced a biofuels law in 2021 and later published associated secondary legislation to guide its implementation.

The biofuels law, in force until end-2030, was branded a promotional regime by the government, with some quarters of the biofuel industry criticizing it as damaging to the sector.

Under the law, the minimum proportion of bioethanol in the gasoline mix remains at 12% and the minimum proportion of biodiesel in the diesel mix is 5%, down from 10%. The energy department is authorized to make future cuts.

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