The cessation of gas sales to Argentina will not affect export volumes, as they will be redirected to Brazil at competitive prices

The following is a machine translation of a Ministry of Hydrocarbons and Energy release

The suspension of natural gas sales to Argentina will not affect volumes or impact projected revenues from the export of this energy. All available gas will be destined for the Brazilian market, aimed at various customers at competitive prices, according to the conditions of each customer and contract.

The suspension of gas purchases by Argentina had been planned by the Ministry of Hydrocarbons and Energy for several months. The supplies of natural gas to Argentina in August and September were made possible thanks to an addendum, agreed upon following a request from the Argentine government. The original contract, which obliged YPFB to supply gas, ended on July 31.

This addendum was negotiated due to a delay in the reversal works of the Argentine gas pipeline, which caused problems in covering winter demand in that country. For this reason, it was agreed to also supply gas during August and September, however, it was already planned that the shipments would end at the end of this month.

Although the original contract remains in effect until the end of the year, during the last quarter Argentina will only be able to request gas if Bolivia has availability, since there is no contractual obligation after October.

The volume of exportable gas will not be affected by the cessation of Argentine demand and will be redirected to the Brazilian market. The exportable volume remains the same, whether to Argentina or Brazil. The Brazilian market has a variety of clients that offer more competitive prices.

The levels reached in 2014-2015 were higher due to the international price of oil and the volumes exported in that period. However, now, the income from this management will be similar to that of last year. Currently, current production is above 33 million cubic meters per day (MMmcd). The domestic market consumes between 13 and 14 million, which leaves an exportable balance of between 18 and 19 MMmcd.

The Ministry of Hydrocarbons and Energy, together with YPFB, has made significant efforts in exploration, with investments in traditional and non-traditional areas, with which it is hoped to maintain and increase hydrocarbon reserves. This effort will allow the decline to be halted or reduced.

The recent discovery at Mayaya Centro-X1, located in the department of La Paz, which could be put into production in three or four years. This discovery will add to current production and increase exportable volumes by 2027 or 2028. Although there is still no exact quantification of the reserves, it is estimated that the discovery is comparable to the traditional megafields in the area.

Furthermore, Brazilian demand for Bolivian gas is guaranteed, given the country's energy needs. In this sense, all production that will no longer go to Argentina will be destined for Brazil, where there is high demand. In addition, the strategy includes taking advantage of Argentina's surplus volumes to transport them through our pipelines to the Brazilian market.

Background

The contract signed between YPFB, representing the Bolivian State, and Energía Argentina SA (ENARSA) was signed in 2006 for a duration of 20 years. During the 18 years of validity of said contract, nine addenda were made that included the change of name from ENARSA to Integración Energética Argentina Sociedad Anónima (IEASA), as well as delivery conditions, supply and reception guarantees, among others.

The most recent addendum, signed in July 2024 between YPFB and ENARSA, established the delivery of gas for a period of two months, with a volume of up to 4 million cubic meters per day (MMmcd), valid until the end of September.

At the same time, Supreme Decree 5206 of August 28, 2024, and Ministerial Resolution 150-2024, through the Ministry of Hydrocarbons and Energy, declared the pipelines to be of national interest, allowing YPFB to undertake new business models consisting of adjustments to gas pipelines that facilitate the transportation of “gas in transit” and enable natural gas export operations from Argentina to third countries, passing through Bolivia through existing transportation systems, which will generate additional income for the country.

During the execution of the contract signed between Bolivia and Argentina, the operations allowed the export of natural gas in volumes ranging from 2 to 17 MMmcd, with prices that fluctuated approximately between $us 3 and $us 10 per million BTU (MMBTU). The income generated by these operations reached approximately $us 19,000 million.