Business leaders say gas pipeline is ‘transcendental’

Business community expects the pipeline to transform Argentina into a 'regional player' while industry officials hope for new productive hubs.

 At the inauguration of the Néstor Kirchner gas pipeline, Economy Minister Sergio Massa thanked the private sector companies involved for carrying out the project “properly and on time”. Businesses approve of the work, too: energy sector sources expect greater gas production, with Argentina becoming an important regional actor. Industrial sources believe more competitive energy supply could help develop industrial hubs and create more jobs. 

Damián Mindlin, head of construction company SACDE, which worked on the pipeline, described the work as “transcendental”, highlighting “the successful joint effort between the State and the private sector, which will serve as an example for the development of future projects.” While construction was carried out by private companies, regulation was carried out by state company Energía Argentina (former Enarsa) and financing came from the treasury. 

Mindlin added that the acquired know-how can be used for upcoming infrastructure works: “Together with Techint, we’ve used new technology for the first time in the country, and we’ve provided 30,000 hours of training for workers in specific trades,” he said. 

“All that acquired knowledge will remain for new works that are as important as this gas pipeline.” 

The Herald’s sister publication Ámbito visited the school that SACDE inaugurated to train welders in the use of new machinery. The company expects that at least six more gas pipelines will be needed.   

“Energy has become of vital importance in the world, and in Argentina this led to the reevaluation of Vaca Muerta, with natural gas as a transition energy source,” said Argentine Industrial Union (UIA) President Daniel Funes de Rioja.

“It will be important for the substitution of energy imports, the potential to export, local consumption, and to add value to that gas.”

When asked if the public financing model for such works should continue, he said: “We need to think of alternatives. It’s not ideological. Argentina must find a public-private partnership model, which could be mixed works or private works, with the State in the essential role of regulating. Because a lot of investment will be necessary for what is coming in the fields of energy and mining.”

Sources in the major energy company Pan American Energy (PAE) described the inauguration of the work as “a successful display of public-private participation”. They also stressed the role of the Gas Plan. “As a long-term state policy, it enabled competitive tenders between all natural gas producers,” they said. “In the case of PAE, the company will provide 2 million cubic meters of the 11 million cubic meters of natural gas that will start flowing daily this winter.” Company sources revealed that they will keep providing more gas in the next stages of the gas pipeline. 

Officials from gas transport company TGN said the pipeline brings a chance for Argentina to become a “regional player” if it goes ahead with the works that will allow the country to export gas to its neighbors. Sources in the company say they have just finished two projects in Córdoba that will be key for the “future reversal of the Northern Pipeline”. This will allow gas to be flowed from Vaca Muerta to the north of the country, replacing Bolivia’s declining input. The works were carried out in the Leones and Tío Pujio compression plants, and will increase the transport volume by 40%. 

There is a unanimous view among companies in the hydrocarbon sector, according to Luciano Fucello, country manager at oil and gas company NCS Multistage. “The entire private and public sector sees it as a necessary work,” he said. “You couldn’t transport one more cubic meter of gas, and if you can’t transport the molecule, it’s worth zero.” He also celebrated that “Argentina is thinking in the mid-term,” since the country will no longer import energy from Bolivia, given its dwindling production.   

Consequently, he expects companies to put into operation new Vaca Muerta pits that they had kept closed without production. However, he also stressed that this pipeline is just the first step of a series of works that must be carried out. 

The industrial perspective

“This work should have been done in 2019,” Fucello said. “Back then the sector already knew that the transport capacity would be maxed out. Looking ahead, the sector expects these bottlenecks to be solved before they explode. The imminent ones are the lack of equipment to sustain activity and the 50,000 qualified workers the industry will need.”    

Funes de Rioja said: “The work shows that there are landmarks that enable us to rethink Argentina. With shared ideas, without going into whether this should have been done 10 years ago or 4 years ago. It is proof that despite the contradictions, we can find common paths.” 

He also highlighted the efforts of the private sector companies that participated in the construction, which was completed in 10 months. “They tell me this work usually takes at least 24 months,” he said. “There were several branches of the industry sector represented by UIA, so we are proud of the end result.”

Regarding the industrial sector in particular, he hopes companies can obtain gas at “more competitive prices”. Among the industries that could now develop, he mentioned fertilizers, polyethylene, and the chemical and petrochemical industries. However, resource-rich areas such as Patagonia or the Andean cordillera could become “true industrial hubs”, he said, but that would require major investment in training and connectivity. 

Meanwhile, in the small and medium industrial company sector, Daniel Rosato, head of IPA, said: “The gas pipeline will be essential to plan for the growth of industries in the future, because since we will have energy, you can project, and that will provide more predictability for investments.” 

He also stressed the possibilities in terms of jobs: “A more industrialized nation means more jobs, higher purchasing power, the end of welfare, and the rearrangement of the production network.”

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