Chile drives sky-rocketing growth in Argentina gas exports

Argentine gas exports increased 544% year-on-year in August, according to regulator Enargas.

Firms piped 6.20Mm3/d (million cubic meters a day) across the border, with main buyer Chile accounting for 5.91Mm3/d, up 799%.

Favorable prices and domestic transport restrictions – along with a push to build firm, year-round exports – are making Chile blink brightly on the radars of Argentine producers, chiefly those operating in the Vaca Muerta formation. 

Other local factors can help explain the increase in August exports, such as stronger gas output and an improvement in hydrological conditions that has eased demand on thermoelectric plants, Luciano Codeseira, co-director of Universidad Austral research unit Instituto de Energía, told BNamericas.

Codeseira also referred to the economics of tapping the export market, where gas fetches a stronger price than under the local Plan Gas supply program.  

Argentine producer Pampa Energía, for example, recently said it would get almost US$8/MMBTU (million British thermal units) under an October-May Chile export contract, compared with US$4-5/MMBTU locally.

“There are price conditions that also justify exports to Chile,” Codeseira said. 

He added that imports of LNG – which help Argentine meet domestic gas demand in winter – have decreased.

“Basically for the same factors, which also opens the door for increased exports via [pipeline to Chile] GasAndes.”

Almost all – 5.55M3/d – of the gas exported to Chile in August was sent via the GasAndes duct, which carries Vaca Muerta output to Santiago’s metropolitan region. 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.

Local hydrocarbons player CGC – which as a 43% operating stake in GasAndes – is mulling a compression project to boost the pipeline’s capacity to 17Mm3/d and increase exports.

The balance of Argentine gas exports to Chile in August, meanwhile, were sent through the 5.2Mm3/d Gasoducto del Pacífico pipeline, which runs between Neuquén basin field Loma La Lata and south-central Chilean region Biobío. This year Chile and Argentina struck a firm export deal, involving 300,000m3/d via Gasoducto del Pacífico.

Exports to Uruguay fell 2% year-on-year to 300,000m3/d in August, according to Enargas. No Argentine gas was piped into neighbor Brazil.

Gas exports typically fall over Argentina’s cooler period of October-April, as output is prioritized for domestic consumption. Dispatches, for example, were 9.9Mm3/d in summer month December. 

Overall gas production in Argentina was almost 140Mm3/d in July, up 6.9% year-on-year, according to data from think tank the General Mosconi energy institute. Unconventional gas – shale and tight – accounted for 79.6Mm3/d, up 22.7% year-on-year.

Federal energy department officials recently said a new round of Plan Gas would be announced to secure additional production to fill the first phase of the planned Vaca Muerta gas pipeline, which would chiefly ease a dispatch bottleneck between the formation and demand hubs in Buenos Aires.

LNG export projects are also on the drawing board. On account of the major investments needed, firms are likely waiting for a stabilization in macroeconomic conditions and favorable regulatory signals from the government and production signals form the industry. 

Companies eyeing LNG liquefaction opportunities in Buenos Aires include state oil firm YPF, which is mulling options in partnership with its Malaysian counterpart Petronas. Local gas transporter TGS and US energy logistics firm Excelerate also have a joint project in the province. 

Local hydrocarbons firm Tecpetrol is considering a plant in Río Negro province, according to Bloomberg.

CGC and a local energy lawyer said recently that gas could be piped to Chile and converted into LNG there and then shipped on by sea. Existing gasification infrastructure would need converting.