Exports to Brazil: Why Argentine energy chief would favor a domestic duct

Argentina could export gas to Brazil through Bolivian midstream infrastructure – but piping the fuel directly via a new duct is more desirable, an Argentine sector chief said.

Argentine gas output is trending up while production is tumbling in traditional regional gas provider Bolivia in a context of limited discoveries and dwindling supply in mature fields.

Energy-hungry Brazil is blinking on the radar of Argentina, which is building the first phase of a Neuquén basin production debottlenecking pipeline, known as the Vaca Muerta duct.

Associated work – such as the Mercedes-Cardales and La Carlota-Tío Pujio links – will permit the flow of basin gas to northern offtakers, impacted by reduced Bolivian exports.

“Argentina’s [hydrocarbons] resource is so big that, probably, if we make the correct decisions, we can access the Brazilian market, not just via Bolivian infrastructure, which would be the quickest and the easiest avenue, but also via construction of another gas pipeline that would connect with some infrastructure in southern Brazil,” the chair of state energy company Energía Argentina, tasked with expanding the country’s natural gas transport infrastructure, Agustín Gerez, said during a webinar.

Argentina already has a 2.4Mm3/d (million cubic meters per day) pipeline link to Brazil, the 451km Aldea Brasilera-Uruguayana pipeline, which feeds a thermoelectric power station. 

“For me personally, if you asked me, I wouldn’t want to depend on a third party in order to access a market," Gerez said. "I would like our country to have independence in terms of exports to Brazil. It’s something that’s being evaluated.”

Bolivian gas production will decline more rapidly than expected, falling from 1.4Bf3 (billion cubic feet per day), or 39.6Mm3/d, in 2022 to as low as 400Mf3/d by 2030, according to a report from research firm Wood Mackenzie. By 2030, Bolivia may become an importer of gas, the report states.

Bolivian gas exports to northern Argentina have been falling. Gerez said the situation was “worrying.”

Argentine gas production, in contrast, climbed 8% year-on-year in March to 9.97Mm3/d, with exports to Chile accounting for 9.80Mm3/d, according to regulator Enargas. Shale and tight gas producers are driving growth. 

ALSO READ: Argentine cross-border gas dispatches climb, producers eye firm exports

WILL THE VACA MUERTA PIPELINE BE READY ON TIME? 

Construction firms contracted by Energía Argentina are working against the clock to complete the first phase of the Vaca Muerta pipeline by end-June.

The government wants the infrastructure operational by then, when demand climbs as temperatures drop, to help substitute imports, chiefly LNG, gas oil, diesel and Bolivian gas. The focus is meeting power generation sector demand.

Work was around 45% complete in April, Gerez said during the webinar, hosted by natural gas market trading platform Megsa.

An upbeat Gerez said that “in general terms, we’re doing well” and that Energía Argentina was laser-focused on “achieving objectives we have set for ourselves, on achieving objectives that are good for the country.”

Analysts have highlighted the challenges of executing such a large project in under a year.

In terms of energy imports, which also include electric power from Brazil and Uruguay, Argentina is spending around US$8.8bn a year. 

Following completion of both phases, Argentina will still need to import, around US$1.33bn a year, LNG and liquid fuels, to meet winter spikes in demand, an Energía Argentina presentation said.

Once built, the infrastructure would remain state-owned but be operated and maintained by the private sector, where the two key players with the requisite technical capacity are TGN and TGS. An associated tender will be held, the webinar was told. 

WORKS SCHEDULE

Project: Phase one (Tratayén-Salliqueló)
Planned entrance date: June 20
Status: Execution phase

Project: Ordoqui Loop
Planned entrance date: June 20
Status: Execution phase

Project: Mercedes-Cardales link
Planned entrance: Winter 2023
Status: Execution phase

Project: Tratayén compression plant
Planned entrance: July-August
Status: Execution phase

Project: Salliqueló compression plant
Planned entrance: July-August
Status: Execution phase

Project: Gasoducto Norte flow reversal/La Carlota-Tío Pujio work
Planned entrance: Austral Fall 2023
Status: Tender preparation phase

Project: Phase two of Vaca Muerta duct (Salliqueló-Jerónimo)
Planned entrance: Austral Winter 2024
Status: Tender preparation phase

FIRST-PHASE WORK

The first phase involves pipeline construction  between Tratayén in Neuquén province and Salliqueló in Buenos Aires province (558km). Ancillary projects are included, among them construction of duct Mercedes-Cardales (73km), in Buenos Aires province. 

Also planned is flow-reversal work on phases I and II of the Gasoducto Norte pipeline and expansion work on other ducts. Flow reversal would permit the transport of gas from the south to the north.

SECOND-PHASE WORK

The second phase would involve laying pipeline between Salliqueló and San Jerónimo in Santa Fé province (484km), further flow reversal work on the Gasoducto Norte pipeline and connection and compression work, including on the partly completed GNEA system. 

Objectives of Argentina are substituting imports and building firm exports to its neighbors and eventually tapping the global LNG market, which would require outlay on liquefaction plants. 

The first-phase is being financed with public funds. Against a backdrop of economic stress, the second phase would likely require a hefty contribution from the private sector.