Argentina buys more gas from Bolivia to ward off winter shortages

Twenty-eight LNG carriers will also boost supply while work to flow gas north from Vaca Muerta is completed

Energía Argentina has signed the ninth addendum to its contract with Bolivian oil and gas company Yacimientos Petrolíferos Fiscales de Bolivia (YPFB) to ensure the supply of natural gas for demand in northern Argentina for August and September.

The supply will enable central and northern Argentina to be supplied with up to 4 million cubic meters per day (MMm3/day), depending on demand, while the northern gas pipeline reversal project is completed. 

The contract was originally set to expire on July 31, but to avoid gas shortages, it was decided to reactivate and extend it until the end of winter.

The national government’s strategy to prevent another energy crisis includes supplementing Bolivian gas purchases with the acquisition of nearly 30 liquefied natural gas (LNG) vessels. These will arrive in the coming weeks at the Expedient floating regasification terminal moored at the port of Escobar, operated by Excelerate Energy. For 2024, Enarsa has already awarded contracts for 28 LNG vessels totaling US$618 million.

Additionally, energy officials have recently made progress in negotiations with Brazil and Chile to increase gas supply.

With Chile, an agreement was reached last week to import natural gas from the state-owned Enap, from the Mejillones LNG terminal. “Engie Energía Chile and Enap Refinerías will sign a natural gas purchase agreement to export the volumes allocated to Enarsa,” said the Chilean Energy Ministry.

In the case of Brazil, a memorandum of understanding was signed at the end of April between Enarsa and Petrobras for three years, with various purposes including “solving gas supply for the [north-western Argentina] region.” Petrobras sent an LNG vessel in May to alleviate the energy stress.

When will the pipeline reversal be finished?

The northern gas pipeline reversal, a strategic project to transport gas from Vaca Muerta to northern Argentina, is expected to be completed by mid-September, according to official and private sources.

It is estimated that the reversal project of the TGN gas pipeline will be operational by September 15, allowing an additional 5 MMm3/day to be delivered to the northern provinces beyond current capacities, with an additional 4 MMm3/day in a second phase.

This is the only public work that the government has decided to prioritize, as it is crucial for delivering gas to seven provinces in central and northern Argentina. The gas will supply household demand and enable power generation by thermal power plants.

The Development Bank of Latin America has loaned Argentina US$540 million for the project, which will distribute the growing unconventional gas production from Vaca Muerta in the Neuquén Basin. 

The reversal will supply gas to the provinces of Santiago del Estero, Tucumán, Catamarca, Salta, Jujuy, La Rioja, and Córdoba. Once completed, it will have a capacity of approximately 16 million cubic meters per day.

The reversal has already included welding of sections 2 and 3, the first 100 kilometers of the so-called ‘Federal Integration Gas Pipeline’ (out of a total of 122 km). This pipe connects Tío Pujio with La Carlota in Córdoba, linking the Central-West and Northern gas pipelines. To shorten construction times, an automatic welding system is being used.

The project is progressing with the construction of the remaining 22km of the pipeline, 62 kilometers of loops to the Northern Gas Pipeline near Ferreyra and Córdoba city, and the reversal of direction for four compressor plants. The completion date is set for late August.

Techint and Sacde completed these welds, but they have not yet been paid by the national government, which owes them approximately AR$14 billion (US$15.2 million at the official exchange rate, US$11 million at the MEP rate) from May, covered with commercial bank credit.

The total project budget is US$720 million, with the US$540 million Latin American Development Bank loan covering three quarters of the cost.

Originally published in Ámbito.com: Energy Report

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