Snapshot: Argentina’s US$700mn gas pipeline flow-reversal push

A US$712mn Argentine pipeline project designed to help support the flow of Neuquén basin gas to the country’s north has advanced.

President Alberto Fernández, via decree, authorized the signing of a loan of up to US$540mn granted by regional development bank CAF.

The funds will help bankroll the initiative, which involves flow-reversal work on pipeline Gasoducto Norte and associated projects such as the La Carlota-Tío Pujio link.

State energy company Energía Argentina, tasked with expanding the country’s natural gas transport infrastructure, this month said officials were preparing the tender documents.

The flow-reversal work would help facilitate the transport of gas from Argentina’s Neuquén basin to northern offtakers. It would also help mitigate a reduction in imports of Bolivian gas – cited as a critical role by Energía Argentina – and, in a turning of the tables, may eventually facilitate exports to Bolivia, as well as to Chile and Brazil, countries already linked to Argentina via pipelines.

The work, deemed urgent, is linked to the Vaca Muerta gas pipeline project. The first phase of this project is due to enter service around the middle of the year. The second phase, penciled in to become operational in the southern hemisphere’s 2024 winter, would facilitate increased gas flows to the north and, following the completion of further flow-reversal projects, the full substitution of Bolivian imports and growth in exports.

Argentina is ramping up domestic gas production to help substitute imports and build a firm year-round exporting industry. The Neuquén basin – home to the Vaca Muerta unconventionals formation – is driving growth. The Vaca Muerta pipeline is designed to help ease a dispatch bottleneck and support production growth.

KEY PROJECT COMPONENTS 

The CAF funds are scheduled to be disbursed in two equal tranches, one per year. The balance of US$172mn would be obtained locally, according to project documents.

The bulk of the funds would be used to help pay for the La Carlota-Tío Pujio pipeline – a 123km duct of 36 inches in diameter in Córdoba province – as well as 62km of 30-inch loops, also in Córdoba.  

Works
La Carlota-Tío Pujio pipeline: US$473mn
Gasoducto Norte loops: US$183mn
Compression plant flow-reversal work (engineering, consumables and works): US$46.3mn
Project inspection: US$5.0mn

Administration
 External auditor: US$250,000
 Project support: US$250,000
 Strategic evaluation: US$281,250

Financial expenses
Commission for financing: US$4.59mn
Evaluation expenses: US$50,000