Low temperatures lead to temporary gas shortage in Argentina

The government said that a shipment had begun refilling the county’s gas system and that supply would be normalized by Wednesday night

The government announced that the gas shortage that affected the country in the previous days should be normalized overnight after a shipment acquired from Brazilian company Petrobras had begun refilling the country’s gas systems. 

More than 150 large companies and industries have been suffering gas shortages and were forced to interrupt their production chains over the past few days, as Argentina’s energy matrix has been under duress for the past 10 days due to low temperatures. Compressed natural gas (CNG) stations across the country shut down on Wednesday as they couldn’t provide their regular refueling service.  

“We had a problem with the payment but that was solved. As of 9 a.m. [Wednesday morning], gas is being pumped into the system,” presidential spokesperson Manuel Adorni said in his usual daily press conference. He added that the shortage was due to the unusually high demand for this time of year.

“We’re experiencing the harshest winter of the past 44 years, and demand suddenly grew by 55%,” he added. In the southern hemisphere, though, winter officially begins on June 21.     

Locations with “priority demand,” such as private homes and businesses, are on track to use almost 80 million cubic meters per day. Traditional demand in May is around 45 million.

In this scenario, electricity-providing company Cammesa called for an urgent tender to purchase 12 fuel oil and diesel shipments to meet higher gas demands. Twenty ships in total were set to be acquired. These resources will be used entirely to generate thermal energy, which on Tuesday accounted for more than 55% of the country’s total electricity generation.

Lack of dollars behind payment problem

The recent problems were because Enarsa, the company that manages the gas supply in Argentina, was unable to purchase a US$22 million LNG shipment from Petrobras after Brazil halted the operation due to an error in the preparation of the letter of credit and a lack of dollars. 

The botched shipment was set to be injected on Tuesday and Wednesday into a plant in Buenos Aires province. The sudden lack of gas led to the creation of an emergency crisis committee in Enarsa to analyze future steps.

The decision was made to interrupt gas supply to more than 150 industries and companies, mainly in Córdoba, south of Santa Fe and north of Buenos Aires province, and to the almost total cut-off of CNG stations.

These measures were taken in haste because, as official sources admitted to sister publication Energy Report, it was thought that the rise in electricity and gas rates would cause residential demand to fall and that much of the energy infrastructure would not be needed.

The crisis commission decided to cut gas supply to industries with high demand, like wood, ceramics, and plastics, but also petrochemicals, oil, cereals, and agro-industrial companies. Industries with continuous production processes, which cannot stop production, were not affected.

All CNG refueling stations were closed

“The supply went into emergency and practically all CNG refueling stations will close,” Oscar Olivero, vice-president of the Chamber of Compressed Natural Gas Retailers, announced on Tuesday. 

Speaking to radio station Radio Con Vos, Olivero explained that this measure was taken to prioritize gas supply to homes, hospitals, and schools within a context of extraordinarily high residential demand and problems in gas transportation infrastructure.

Gas Distributor of the Center (Ecogas, for its Spanish initials) notified Cordoba refueling stations late Tuesday that they would have to suspend CNG refueling indefinitely. Following the government’s announcement, the situation is expected to return to normal throughout the day. 

Experts, however, warn that part of this shortfall could have been covered if the government had finished building the compressor plants of the Néstor Kirchner gas pipeline, which was delayed due to a lack of funds for public works.

What happened to the Néstor Kirchner gas pipeline?

Austerity policies implemented by Javier Milei’s government delayed infrastructure work. Due to higher demands for gas, an additional US$500 million will have to be disbursed in June. The Néstor Kirchner pipeline transports 11 million cubic meters of gas per day, but if the Tratayén, Salliqueló, and Mercedes compression plants were operational, capacity could have been increased to 22 million.

If the funds had been provided on time, the plants would have been completed, and Vaca Muerta’s transportation capability would have doubled. The Tratayén compressor plant could start operating in mid-June, which would add 5 million cubic meters per day. This would mean saving up to US$350 million per year through the replacement of liquid fuels and LNG imports.

Meanwhile, the Salliqueló plant will not be ready until September. The delay is mainly due to the fact that Enarsa stopped paying the companies in charge of the works during the first months of government. It owes US$30 million to construction company Sacde and 10 million to Contreras, which forced both companies to work below capacity. If Enarsa had paid on time, both projects would be done by now

The government’s debt is US$40 million, but the decision not to pay now forces it to pay US$500 million. If the pipeline had been operating at full capacity, imports would have been needed, but for less than half that amount.

With information from Ámbito


All Right Reserved.  Buenos Aires Herald