Argentina’s TGS awaiting three design options for LNG plant

Argentine midstream gas player TGS continues to advance plans for an LNG export facility in Buenos Aires province. 

TGS expects to receive, by year-end, results of studies conducted by three engineering companies and, in parallel, has secured rights to use part of Bahía Blanca port, CFO Alejandro Basso said.

TGS has previously said it planned to build a modular facility there, in partnership with logistics firm Excelerate Energy, with initial gas processing capacity of 4Mm3/d (million cubic meters per day).

“We are going to have three different alternatives; with that, we’re also going to have the estimated cost of the project,” Basso told the company's Q2 results call. “I think they’re going to finalize in the next 2-3 months, and at the same time we have reached an agreement with the port of Bahía Blanca for the space that we need there.”

Any final investment decision would likely require approval in congress of the government’s LNG promotion bill – presented earlier this year – signals of macroeconomic stability and iron-clad gas supply guarantees. Given Argentina will choose a new president in October and that approval of the bill is unlikely before then, the green light could be at least a year away. 

On the topic of the upcoming elections, Basso told the call there was general consensus among political parties of the importance of the Vaca Muerta unconventional hydrocarbons formation to the country’s development.

TGS is sitting on a 145bn-peso (US$510mn) cash pile, up from 139bn pesos a year earlier. “As you can see, we maintain a comfortable level of cash position, which gives us enough liquidity to continue investing in our business investment plan, mostly in the Vaca Muerta midstream business,” Basso said. 

TGS posted total comprehensive income for the quarter of 12.1bn pesos, up from 11.4bn pesos a year ago.

One of the company’s biggest projects is an expansion of its Tratayén gas-conditioning plant, involving around US$280mn to ramp up capacity by 13Mm3/d to 28Mm3/d. Work is expected to end next year.   

TGS is this month also commissioning a 32km gas pipeline extension, work with a price tag of US$49mn and designed to serve producers in northern Vaca Muerta gas fields. 

The company is also mulling NGL production investment and is seeking cost estimates, Basso said, adding that incentives, such as those proposed under the LNG promotion bill, would be needed to unlock investment.  

In related news, Argentina’s cash-strapped government has decided to ease import restrictions, local press reported, following complaints from the hydrocarbons industry that activity was being hampered by a lack of supplies and spare parts.

TGS said the company had faced some restrictions on the importation of goods and services.

Argentina has implemented a series of measures to help preserve scarce foreign reserves. 

In June, TGS was awarded a five-year contract to operate and maintain the 573km first phase of the President Néstor Kirchner, or Vaca Muerta, natural gas pipeline. Current capacity is 11Mm3/d, expected to climb to 21Mm3/d by year-end following the commissioning of two compression plants.

Argentina is working to expand midstream and upstream capacity to substitute some imports and to spur exports. The Vaca Muerta duct – which expands dispatch capacity from the Neuquén basin – constitutes the key pillar. 

TGS transports over 60% of gas consumed in the country, through a network of over 9,000km.