Argentina resumes gas exports to northern Chile

Chilean power generator Engie has this month started to import, via a northern pipeline, gas produced offshore in Argentina’s southern Austral basin.

The gas will be piped via infrastructure operated by midstream players TGS and TGN and cross the Andes mountain range via the NorAndino pipeline, which Engie holds a stake in.

The 1,066km NorAndino duct links Argentina’s Salta province with Engie terminals on the coast of Chilean mining region Antofagasta and has capacity of 8Mm3/d (million cubic meters per day).

Firm imports via the infrastructure – which had last occurred more than 13 years ago – will be provided by Pan American Energy and Wintershall Dea, partners at the CMA-1 concession.

Combined, the agreements are for up to 400,000m3/d from 1 October 2023 to 30 April 2024, according to documents published by Argentina’s federal energy department. 

The gas is destined for power generation and industrial use. Under an adjustment formula based on Brent prices, it could range, today, between US$10.1 and US$11.4 per MMBTU (million British thermal units) at the border.

In a parallel development, Argentina has put out to tender a flow-reversal project to support the transport north of gas from the Neuquén basin, which is driving output growth and pulling in the bulk of investment. Chief objectives of the project, which involves changing the flow direction of the Gasoducto Norte pipeline from north-south to south-north, are substituting declining imports from Bolivia and increased exports.

Luciano Codeseira, executive director and founder of Gas Transition Consultant (GTC) and co-director of the Energy Institute at Argentina’s Universidad Austral, told BNamericas: “This allows Argentina to continue strengthening itself as a reliable supplier in the region through firm exports.

“In this sense, it is worth remembering that the northern Chilean market represents an opportunity for expansion for the destination of Argentine gas. We estimate that northern Chile can represent a market of around 4 to 5Mm3/d for Argentine exports, leaving significant room for growth with the complete reversal of the Gasoducto Norte.”

CMA-1 concession acreage spans federal and provincial (Tierra del Fuego) jurisdictions.

Rosaline Corinthien, CEO of Engie Chile, said in a statement: “At Engie we believe that natural gas is essential to accompany the energy transition towards a more efficient matrix. To achieve this, we as a group make our infrastructure and experience available to make this a reality,” 

Argentina already exports gas from the Neuquén basin on a firm basis.

Exports of gas to Chile generated US$688mn in 2022. Revenue has climbed apace this year, reaching almost US$560mn in January-July, up 86.8% year-on-year.

Favorable prices, higher than the rough average of US$3.5/MMBTU obtained under domestic supply contracts, or Plan Gas, contracts, along with a push to build firm, year-round exports, are making Chile blink brightly on the radars of Argentine producers, chiefly those operating in the Vaca Muerta unconventional formation.

In August, Argentina exported 3.76Mm3/d gas, with Chile accounting for 3.44Mm3/d, down 42% year-on-year, according to data from Argentine gas regulator Enargas. 

The bulk of exports to Chile, 3.06Mm3/d, was piped via GasAndes, which is part of the national transport network and links the Neuquén basin to Chilean demand hub Santiago Metropolitan region. Producers dispatched 380,000m3/d via Pacífico, a standalone duct linking the basin to Chile’s Biobío region.

Northern Chile also has a second duct connecting the country to Argentina: Enel Chile’s 941km GasAtacama link.

Over the past 12 months, Argentine gas exports spiked at 10.1Mm3/d, in February. National gas production is around 140Mm3/d.

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