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The gas pipeline to Vaca Muerta is underway: the government promises to finish it in June 2023

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The gas pipeline to Vaca Muerta is underway: the government promises to finish it in June 2023

The president, Alberto Fernández, to Vaca Muerta.

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Argentina has one of the largest gas reserves in the world at Vaca Muerta, but I still can’t fully enjoy it. It is because companies cannot transfer the gas they extract there to the major points of consumption. Energía Argentina (the former Enarsa) hopes that this situation will be reversed with the construction of a gas pipeline that will connect Vaca Muerta with the province of Buenos Aires.

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The works will start in these days and in the state company they swear it it will be ready by June 20, 2023. In an act a few days ago, President Alberto Fernández told Agustín Gerez (head of Energía Argentina) that he would give him another 10 days, until the beginning of July. The company’s number one told his team to keep working towards the original date.

The work will cost $ 220 billion plus inflation that builds up until June 2023, when it is estimated to be completed. The Techint-Sacde duo is the one with the greatest responsibility (they build three out of five sections), while Techint will also be the supplier of the tubes. From the Techint factory, a truck will leave every 7 minutes bringing the pipes to the areas.

The 87% of the areas that the pipeline will cross already have the “authorized” trackthat is, it can be built. Sections where the owners disagreed have not been resolved (because there was no economic agreement or they are in succession). Replacing imported gas with domestic gas can generate a savings of up to $ 3,000 million (it will depend on the price of LNG in 2023, now it is increasing).

The construction of the pipeline would have required $ 220,000 million between civil works and the purchase of pipes. However, inflation has put its wedge and the project price is on track to increase at the pace of the consumer price index.

The purchase of pipes has already been awarded to a Techint company. That national group – together with Sacde, Marcelo Mindlin’s construction company – will also carry out three of the five sections (in the specifications they are called “lines”) of the project.

The companies have already pocketed an advance of 30% on the works -40% in the case of the pipes- and later they will receive more funds. This is how they present certificates of work, in which the work done is indicated.

To supervise the evolution of the work, Energía Argentina will have inspectors in the different places where it is built.

Energía Argentina is also responsible for the purchase of LNG ships in the winter. It is to supply the lack of national gas in cold periods. The company has already planned to need fewer “refills” over the next season, as it will have a larger volume of local gas. Economy Minister Sergio Massa has estimated savings of $ 3 billion by using domestic gas instead of imported gas.

Vaca Muerta houses tanks designated as the second largest in the world by specialists. Argentina consumes more than 170 million cubic meters (m3) of gas per day during the winter. National production covers approx three-quarters of this amount. The rest is provided with imports. The million BTU (the industry unit of measurement) of LNG is $ 55 these days, due to the Russian invasion of Ukraine. The same gas, of domestic production, is paid for between 4 and 8 US dollars.

The company that oversees the pipeline has been criticized for some decisions. For example, in the tender documents, it was established that no company could be awarded the construction of more than one “line” (section). If two companies were associated, they could access two lines.

Techint and Sacde have won three sections, above the two presumably allowed. Gerez as head of Energía Argentina took the direction of moving in that direction. “It was that possibility or declare the tender void, resulting in delays for the entire project,” he explained to the board, which approved the move him.

There was also criticism – for example, from former Energy Minister Juan José Arangur – for enabling BTU – a company involved in the cause of “notebooks” – in one of the sections. It was because his offer was the only one left standing. The other bidders had not been admitted, either because they had no experience in pipeline works, or because they had requested requirements that Energía Argentina did not approve.

BTU could compete with the Techint-Sacde duo, but as this association had already won other tranches, BTU remained the sole bidder. BTU asked to raise $ 55.3 billion. The original budget for this 133-kilometer route was nearly $ 42,000 million.

BTU was managed by Carlos Mundin. Next to him they point out that the company is now in the hands of their son, but that he follows the entire process due to his “vast experience”.

Esuco, owned by Carlos Wagner (former president of the Argentine Chamber of Construction), another repentant for the cause of “notebooks”, also received a section.

The race was launched on May 30th. But the opening of the offers and the whole process had to suffer the resignations of two ministers of the economy (Martín Guzmán and Silvina Batakis) plus the shocks in the price of the dollar.

In Energía Argentina they believe that most construction companies did not like the position of allowing offers of pipeline specialists, a very specific type of work. As for the rejected bidders, in some cases they asked that the state company be in charge of “clearing the track”. In other words, in case of inconvenience along the way, the companies were exempt from liability.

Vaca Muerta’s expansion would increase local gas transportation capacity. Almost 11 million cubic meters per day can be mobilized from the Neuquén depot. The new work would double that capacity, to 22 million cubic meters per day.

A subsequent expansion of this line, to the north, could quadruple current gas production, reaching 42 million cubic meters per day.

Source: Clarin

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