From Vaca Muerta to Chile and Brazil: Massa negotiating more exports

The Energy Secretariat is moving forward with tenders to increase infrastructure and export energy as the electoral campaign continues

In the midst of the electoral campaign, energy is still part of Economy Minister Sergio Massa’s agenda, with ongoing negotiations to obtain the necessary infrastructure to get gas from Vaca Muerta to the Argentine north. 

The government is also in talks with Bolivia about the cost of using existing infrastructure to get gas up to Sao Paulo, Brazil. The last official event in the Union por la Patria (UxP) presidential candidate’s campaign is the inauguration of the oil pipe that will expand crude oil exports to Chile.

Vaca Muerta–Brazil

Argentina will end 2023 with a stable energy balance following a record deficit in 2022. However, the ministry predicts US$7 billion in savings from energy imports in 2024. It’s an important step to get the country back to an energy surplus, for the first time since 2010.    

In order to reach those numbers, they intend to move forward to cover the internal market’s demand for energy. To that end, a month ago the government launched a tender for the Reversal of the Northern Gas Pipeline —  aimed at getting Vaca Muerta energy to Argentina’s northern provinces. While the contract hasn’t been awarded yet, state company Energía Argentina (formerly Enarsa) had already purchased pipes from conduit supplier Tenaris during stage 1 of the Nestor Kirchner Gas Pipeline.

“We got the order to provide the pipes for the reversal and 24 hours later we were already laminating the first plates,” said Javier Martínez Álvarez, Southern Cone president for Tenaris. 

Massa hopes to have the reversal project completed by May 22, 2024. His urgency is explained by the fact that although Argentina’s contract with Bolivia is valid until 2026, the neighboring country is not able to secure its provision, putting next winter’s supply at risk. If the project is ready by then, sources in the Economy Ministry say “the Argentine north will live off Vaca Muerta.” And the almost 20-year-long contract with Bolivia will be terminated.

“It’s an extraordinary work effort with Enarsa and the Industry Ministry and now we have to rush again because we need to get this done before the winter, due to the risk of a deficient supply from Bolivia,” said Martínez Álvarez. “But we already did it once, with the first stretch of the gas pipeline.”

Still, there is yet another ongoing negotiation with Bolivia: how to use the existing infrastructure between Bolivia and Brazil so Argentina can send Vaca Muerta gas to Sao Paulo’s industries. 

“Bolivia is willing to sign a 10-year contract, but they ask for a very expensive price so they can recover their production decline. We hope the negotiations move forward with more reasonable prices,” said a source with a senior position at the Economy Ministry.  

In fact, Daniel Ridelener, CEO of TGN, said at the 2023 Argentina Oil & Gas (AOG) exhibition that all the infrastructure to reach São Paulo is in place through the TBG (Brazilian Bolivia-Brazil Gas Pipeline). However, he revealed that “the issue of how Argentina, Bolivia, and Brazil will be able to reach an agreement is the most sensitive.” 

Furthermore, a tender will be launched in the coming weeks for the second tranche of the Néstor Kirchner gas pipeline, which will run 467 kilometers from Salliqueló to San Jerónimo, in Santa Fe. The call for pipe supply companies will be launched in September, while the tender for the construction of that section will take place in October.

Vaca Muerta-Chile

In a move meant to empower the energy sector in the electoral campaign, Massa will stage his last event in Neuquén before Argentina’s veda electoral bars further campaigning in the run-up to the general election. It will be at the inauguration of the Vaca Muerta Northern Pipeline, which will increase transportation capacity and export crude oil to Chile. He might even be joined by the current governor of Neuquén Omar Gutiérrez, governor-elect Rolando Figueroa, and Alberto Weretilnek, who just won the Río Negro governor election for the third time.

The need to think of Vaca Muerta as a “regional market” was a consensus among the more than a dozen CEOs from the energy sector at the AOG, the most relevant in the sector, which took place last week in La Rural. While they questioned the country’s macroeconomic challenges, they see it as positive that energy remains a key issue for the three political parties with chances to win the presidency.

Originally published in / Translated by Agustín Mango


All Right Reserved.  Buenos Aires Herald