Are Argentine developments dimming Bolivia's gas prospects?
Excelerate Energy's announcement of an MOU with Argentine natural gas distributor TGS to study the potential liquefaction and export of natural gas at Bahía Blanca may further reduce Bolivia's leverage in negotiating a new gas supply deal ahead of the current contract's expiry in 2026.
Reports that Argentina has suspended completion of the Nordeste natural gas pipeline (GNEA), which was envisioned to increase Bolivian gas imports, also adds to the uncertainty of the landlocked nation's future gas shipments to its neighbor.
And last month Argentina issued a resolution that established a procedure for the authorization of gas exports and repealed a 1998 resolution that established the regulation for such exports.
These latest developments would be driven in part by Argentina's unconventional push, in particular shale gas and projects related to Vaca Muerta.
Read Unconventional output soars in Argentina
In addition, relations between the two countries on the gas supply front have been strained, with claims on the part of Bolivia that Argentina has fallen behind on payments, coupled with conflicting supply and demand requirements.
"Bolivia is in a position to sell more gas to Argentina, but at a better price," Bolivia's hydrocarbons minister Luis Sánchez said recently.
In July, Sánchez said that Bolivian gas continues to be the most competitive in the region, and that in the case of Argentina, Bolivian gas costs approximately US$5/MMBTU, and that gas from that country will always be very competitive compared to projects such as Vaca Muerta.
GAS PURCHASE
In related news, Argentina's wholesale power market administrator Cammesa reported that it procured 70Mm3/day of natural gas for power generation from September 10 to December 31.
The process, touted as the first conducted by Cammesa, drew 191 offers from 32 bidders for 143Mm3/day with an average offer of US$3.4/MMBTU, some 20% below the last reference price and 40% less than in July, and will thus save an estimated US$280mn, according to the government.
Authorities said that "the increase of gas production associated to the success of Vaca Muerta... together with the incentive to compete to secure the best gas price, allowed us to distance ourselves from the price path where in October 2018 we would have paid US$5.26/MMBTU and US$6.80/MMBTU next year."
Authorities plan a new tender to supply 25Mm3/d for 24 months.
Additional information on the gas call is available here, and for the liquefaction project, at this link.
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