Business, the government and the opposition appear aligned in a tacit coincidence. It is time for Argentina’s energy industry to take off and for the country to become a generator of dollars, from exports to Brazil, Chile and even the rest of the world. The foreign investors They show willingness to accompany in the task.
The increase in oil and gas production is causing a dozen energy infrastructure projects progress at a good pace. Although the negative record of 2022 (with energy imports of 12,000 million dollars) still weighs, there are prospects for improvement for 2023. And that liftoff happens between 2024 and 2025.
To be ready within that period, it is necessary to start in the coming months with a series of projects. About ten investments are underway in the companies – in various phases -, which have already begun, are ready to materialize or have advanced. Some require disbursements of billions -like a LNG plant-, others are quieter, like oil pipelines or gas pipeline extensions. There will be the possibility to export to Chile, Brazil or other international markets.
There is also ongoing offshore developmentsboth in gas – in Tierra del Fuego – and near Mar del Plata, for oil.
The construction of an LNG plant is the initiative that requires the most dollars. YPF summoned Petronas. The directors of that Malaysian company were in Vaca Muerta a few days ago. The country has a lot of gasbut does not remove it from its deposits because there is no way to transport it. This could be solved with the pipeline that will connect Vaca Muerta with Buenos Aires, but also with extensions of the current networks (TGS and TGN) or other complementary works.
Beyond Petronas, there is interest from Brazilian banks, Arab investors, multilateral organizations and various companies more who don’t want to reveal their next steps yet, but who are excited. High inflation, complications in accessing the foreign exchange market and making profits, as well as violations of regulatory frameworks (for example in the provision of electricity and gas services) are the negative factors weighing on the country.
To flourish all the projects that are at stake, Argentina could make exports exceeding 10,000 million US dollars in 2025. The country would go from energy importer to exporter, a turning point it would change the overall forex landscape.
Besides YPF, other companies are also evaluating their LNG project. Several citizens are talking to large international oil companies to obtain financing. In 2018, YPF made significant progress in dialogues with local companies, to achieve something together. An LNG plant – which transforms gas into liquid, in order to export it – does not fall below a range between 4,000 and 5,000 million dollars.
The first stage of the pipeline that will connect Vaca Muerta with Buenos Aires is a milestone, which should be achieved by mid-year. The next phase would connect Buenos Aires with Santa Fe. Through various reinforcements or expansions, it can be connected with existing pipes reaching Brazil, Paraguay and Bolivia. All markets that can be recipients of Argentine gas.
Argentina will depend less and less on Bolivia and Economy Minister Sergio Massa has announced work for an “inversion” of the gas pipeline with that country. The existing infrastructure, which is used to import, will be adapted so that you can also export. Argentine gas could reach Brazil directly – with extensions and complementary works – of the second part of the gas pipeline. But there is also the possibility that it passes through Bolivia, which has already created its network to Brazil.
South, the French Total Austral has launched the Fénix project, in the land of fire. “It will allow the country from the beginning of 2025 to increase the availability of gas, having 10 million cubic meters of gas per day – which represent about 8% of current production – and to reduce imports of LNG and natural gas of nearly US$ 2,000 million a year”, according to that company.A public consultation is underway for citizens to express themselves, as already in Mar del Plata for the development of YPF with Equinor.
Oil production is outpacing 630,000 barrels per day. The local market consumes less, so export surpluses are created. And this is already happening. There are at least three projects that will increase the ability to ship Argentine oil around the world.
On the one hand there is the Trans-Andean gas pipeline, which will start in April 2023 and will connect Neuquén with Chile. The Trans-Andean country is an oil importer. Argentina has sold it gas, although there have been several interruptions (contracts modified by Argentine political decisions) which have undermined the credibility of the local authorities.
Oldelval, a consortium of oil companies, is also in the process of expanding. The production of Vaca Muerta exceeds the capacity of Oldelval which is already growing and is expected to reach the Atlantic around 2024 and 2025. From there it could be exported to almost anything that overlooks that ocean.
Although it is present in the share capital of Oldelval, YPF has another pipeline of its own, which could carry 360,000 barrels, to the Punta Colorada terminal in Río Negro. There would be a marine terminal after an investment of 1,200 million dollars. He also aims for Argentine oil to watch the world.
With all the potential emerging in oil and gas, electricity does not present the same scenario. Despite the elimination of subsidies by the government, the tariff framework still does not offer attractiveness for new investments. The country exports electricity, but at marginal levels. The increase in gas production bodes well for the plants, which use this input to feed themselves. But rates still don’t offer an attractive path, according to industry sources.
Source: Clarin
