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Roundup: Vaca Muerta gas pipeline compression, Rigi adhesion, concessions
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Vaca Muerta gas pipeline compression
Argentina has switched on a compression plant in the first phase of the Vaca Muerta debottlenecking pipeline, designed to support production growth in the Neuquén basin.
The objective is substituting imports and eventually spurring exports.
The plant, in Tratayén, Neuquén province, raises dispatch capacity to 16Mm3/d (million cubic meters per day) from 11Mm3/d originally.
A second, being built in Salliqueló, Buenos Aires province, will boost capacity to over 20Mm3/d once online.
A second phase of the pipeline is planned.
Rigi adhesion
Lawmakers in Argentine province Río Negro were due to discuss on Friday a bill to adhere to the national investment promotion regime called Rigi.
Adhesion, which may result in the reduction of some provincial autonomy, is required to obtain the benefits of large investments, particularly lithium in the northwestern provinces and LNG in Patagonia.
State-controlled hydrocarbons company YPF is planning to export LNG, initially via floating units off the coast of Río Negro, and eventually build a fixed plant, with Río Negro and Buenos Aires the two jurisdictions being mulled.
The Río Negro legislature is expected to pass the draft legislation, especially given the jurisdiction is vying for hefty LNG investment.
A question mark hangs over whether Buenos Aires province will adhere. Those in favor of the investment going into Buenos Aires highlight that export-oriented infrastructure is already in place there.
Buenos Aires is led by Peronist governor and potential future presidential candidate Axel Kicillof.
Francisco Romano, partner and lead energy lawyer at the Pérez Alati, Grondona, Benites & Arntsen law firm told BNamericas that Buenos Aires may take a different strategy to pull in the investment.
“Kicillof may create a provincial regime similar to Rigi but without adhering to Rigi,” Romano said.
He added: “Of course, the benefits of such a provincial scheme would be much more modest than the ones under Rigi, which include breaks in national taxes, tax-free imports and release of exchange controls – all under national jurisdiction.”
A key pillar of Rigi, part of President Javier Milei’s economic reform bill which became law this week, targets projects with required outlay of over US$200mn.
Qualifying projects will receive tax, customs and forex benefits, with legal and regulatory stability established for 30 years.
Projects have up to two years to adhere and have to deploy, within two years, at least 40% of the minimum investment agreed.
License extensions
Río Negro lawmakers were also due to discuss on Friday a bill that authorizes 10-year hydrocarbons license extensions.
The draft legislation was given the green light at the committee stage earlier in the week, following modifications.
Chief among them is one establishing that each extension needs congressional ratification. Another one, concerning revenue distribution, sets out, for example, that 2% must go to energy efficiency programs.
At stake are 21 contracts that involve nine operators and are due to expire in 2025-28. These correspond to 75% of the province’s extraction licenses.
Around 56% of gas produced in the jurisdiction is conventional and the balance tight, with the four biggest players Capex, YPF, Tecpetrol and Petrolera Aconcagua Energía.
In terms of oil, around 92% is conventional, the balance tight, with the top four players Petrolera Aconcagua Energía, YPF, Capex and Petroleos Sudamericanos.
Río Negro extracts oil and gas from the Neuquén basin.
The jurisdiction is also home to a sliver of the Vaca Muerta unconventionals formation. Last year, Río Negro awarded licenses to Kilwer to explore Vaca Muerta areas Confluencia Norte and Confluencia Sur.
Río Negro was the sixth biggest gas producer in March, reporting 3.5Mm3/d.
In February, according to federal energy department data, Río Negro was the fifth largest oil producer, logging 3,040m3/d (19,121b/d.)
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