Gasoduto Vaca Muerta-Buenos Aires
Oil and Gas

From Vaca Muerta to Chile and Brazil: Massa’s negotiations to increase exports

Sep, 18, 2023 Posted by Gabriel Malheiros

Week 202338

Despite the ongoing election campaign, Argentina’s Minister of Economy, Sergio Massa, is keeping a strong focus on the energy agenda. Currently, negotiations are underway in the Argentine government to advance the implementation of the infrastructure necessary to transport natural gas extracted from Vaca Muerta to northern Argentina. Additionally, government officials are discussing with Bolivia the price of using an existing pipeline to transport gas from Vaca Muerta to São Paulo, Brazil. The UP presidential candidate’s last official campaign act will be the inauguration of another oil pipeline to expand oil exports to Chile.

Vaca Muerta-Brazil

In 2023, Argentina will end the year with an equilibrium in the energy sector, following a historic deficit in 2022. For 2024, the Ministry of Economy projects savings of $7 billion in energy imports, which will be significant for the country to achieve a surplus in the sector, which hasn’t happened since 2010.

To reach these numbers, Argentina plans to grow its domestic energy supply. In this regard, a month ago, the government launched the Reversion del Gasoducto Norte (Northern pipeline) tender to bring energy from Vaca Muerta to the northern provinces of Argentina. Although it has not yet been awarded, the state-owned company Energía Argentina (formerly Enarsa) has purchased pipes from Tenaris as part of the NK pipeline’s phase 1.

That’s why Javier Martínez Álvarez, president of Tenaris, disclosed: “We received the order to provide the pipes for the reversion, and within 24 hours, we were already rolling the first sheets. We have to make it happen before winter due to the risk of insufficient supply from Bolivia. But we’ve done it once before, with the first section of the pipeline so it will be a minor challenge.”

Massa aspires to complete this project by May 22, 2024. The urgency is due to the fact that although Argentina has a contract with Bolivia until 2026, the neighboring country cannot guarantee continuous supply, and there is a risk of insufficient supply for the next winter. Furthermore, if the works are completed, “northern Argentina will depend on Vaca Muerta,” according to the Ministry of Economy. The contract with Bolivia will be terminated after nearly 20 years.

However, another negotiation is underway with Bolivia: how to utilize the existing infrastructure between Bolivia and Brazil so that Argentina can transport gas from Vaca Muerta to São Paulo’s industry. “Bolivia is willing to sign for ten years, but they want a costly contract to recover their decline. We hope that negotiations will advance with more reasonable prices,” mentioned a high-ranking source from the Ministry of Economy.

Daniel Ridelener, CEO of TGN, commented at the AOG 2023 expo that “all the infrastructure to reach São Paulo is available” through the TBG (Bolivia-Brazil Gas Pipeline by TBG). However, he revealed a sensitive issue: “The tripartite negotiation between Argentina, Bolivia, and Brazil is the most sensitive issue because all three actors need to reach an agreement.”

Furthermore, in the coming weeks, the tender for the second section of the Néstor Kirchner gas pipeline will be launched, covering 467 kilometers from Salliqueló to San Jerónimo in Santa Fé. In September, calls will be made for pipe suppliers, while in October, the tender for the construction of this section will be released.

Vaca Muerta-Chile

To highlight the energy sector in the election campaign, Massa will choose to hold his final event in Neuquén before being prohibited from continuing campaigning on the electoral calendar. This last act will be the inauguration of the Vaca Muerta Norte oil pipeline, increasing transport capacity and allowing oil exports to Chile. Additionally, he may be accompanied by the governors Omar Gutiérrez (current governor of Neuquén), Rolando Figueroa (recently elected), and Alberto Weretilnek, who will be the governor of Río Negro for the third time.

At the Argentina Oil & Gas exhibition, the most relevant event in the sector held last week at La Rural, over a dozen CEOs agreed on the need to consider Vaca Muerta as a “regional market.” While they questioned the country’s macroeconomic challenges, they see it as positive that the energy agenda is present in all three parties with a chance of winning the presidency.

Source: Ámbito

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