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Argentine gas export growth slows as incentives plan extended

Bnamericas Published: Friday, November 18, 2022

Argentina’s cross-border gas dispatches continued to climb in October, although at a slower pace than previous months, as officials working to extend and adapt production incentives scheme Plan Gas tweaked export rules.

The country exported 8.65Mm3/d (million cubic meters a day) in the month, up 36% year-on-year. Growth registered 479% in September, according to data from gas regulator Enargas

Argentina produced 136Mm3/d natural gas in September, up 2.4% year-on-year, according to energy think tank the General Mosconi institute. State energy company Energía Argentina is building a new gas pipeline to ease a dispatch bottleneck at production hub Neuquén basin, supporting production growth. Welding work on the 573km duct – which officials want operational by mid-2023, deemed a major challenge – has got underway in Salliqueló, Buenos Aires province.

CHILE

The bulk of October exports – 7.11Mm3/d – were piped through the GasAndes duct, which links the Neuquén basin with Chilean capital Santiago’s metropolitan region. Exports to Chile via the pipeline were up 102% year-on-year, compared with an expansion of 552% in September.

Argentine producers tend to sign contracts with Chilean offtakers to supply gas on a firm basis over the warmer months of October-April. 

Pipeline investment may at some point be needed to support growth, depending on demand in Chile. Nameplate capacity of GasAndes is 10.5Mm3/d but actual capacity is around 5Mm3/d in winter and 9Mm3/d in summer on account of available capacity of feeder infrastructure operated by midstream concessionaire TGN.

Argentina, as it works to boost gas production to substitute expensive LNG imports and spur a firm year-round exporting industry, needs offtakers to soak up excess output when domestic demand dips over the warmer months. Gas exports are more lucrative than domestic sales.

In October, Argentina also sent 280,000m3/d to Chile through the standalone 5.2Mm3/d Gasoducto del Pacífico pipeline, which runs between Neuquén basin field Loma de la Lata south-central Chilean region Biobío. In addition, the country piped 340,000m3/d and 620,000m3/d through the far-south Methanex YPF and Methanex SIP ducts, respectively.

URUGUAY, BRAZIL 

In October, neighbor Uruguay purchased 290,000m3/d via the Cruz del Sur pipeline and 10,000m3/d via the PetroUruguay duct.

Brazil did not import any gas via the TGM pipeline, which feeds a thermoelectric power station close to the border.

GAS EXPORT AUTHORIZATION REQUESTS

Argentina’s federal energy department published two gas export authorization requests in October, down from five in September. 

Vendor: Tecpetrol 
Buyer:
Metrogas 
Maximum amount: 
1.5Mm3/d, from date of authorization to May 1, 2025 (interruptible basis)
Source block: Fortín de Piedra

Vendor: Tecpetrol
Buyer:
Enel Generación Chile
Maximum amount: 
3.0Mm3/d, from date of authorization to May 1, 2024 (interruptible basis)
Source block: Fortín de Piedra

EXPORT RULES

Argentina’s government is extending 2020-24 production incentives program Plan Gas to 2028 and, in parallel, seeking to contract additional output to help fill the future first phase of the new gas pipeline. 

As part of the process, officials outlined benefits for Plan Gas producers that also export and, in a subsequent resolution published in the official gazette amended rules. 

Plan Gas participants that meet their supply commitments would be given preferential rights to export natural gas or LNG on a firm basis during the warmer months, and potentially, the winter months. Argentina does not have export-scale liquefaction facilities, but developers are mulling several projects.

An addenda document states that, to ensure exports do not negatively impact domestic supply, authorities will, prior to issuing authorization, conduct a “comprehensive and systemic analysis of the operating conditions of the internal market, in order to corroborate that domestic demand is supplied efficiently and ensure the security of its supply in each case.”

The document also outlines subsequent steps and refers to force majeure events.

It states: “Once said analysis has been carried out, in which compliance with the aforementioned requirements in relation to firm exports and/or interruptible will be determined, they may not be reviewed again, once their authorization has been granted, in the case of firm authorizations. Notwithstanding the foregoing, the enforcement authority will be able to promptly address exceptional issues (fortuitous event or force majeure) that have an impact on supply.”

Firm gas providers are only exempt from compliance in the event of force majeure.

Argentine producers are working to build a firm, year-round exporting industry after spooking Chile in 2006, when Argentine gas exports suddenly halted amid domestic supply woes stemming from union action. 

Read the resolution and the addenda

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