Oldelval increasing size of Argentine oil pipeline expansion

Argentine pipeline operator Oldelval will increase capacity of a key oil duct by more than originally planned, amid strong demand from upstream players keen on ratcheting up production.

Officials agreed to add 50,000m3/d of new capacity, up from the previously announced 36,000m3/d, Oldelval confirmed to BNamericas. 

Expansion work – already under way – is designed to ease a dispatch bottleneck between the Neuquén basin and export facilities in Puerto Rosales, Buenos Aires province. 

Basin producers are targeting the export market and have been ramping up output, in turn, straining the existing 36,000m3/d nameplate capacity duct, which is running at around 43,000m3/d, partly via use of polymers to boost compression.

Following completion of expansion work, nameplate capacity should stand at 86,000m3/d.

The additional 14,000m3/d of capacity will be assigned to the companies that bid for some of the original 36,000m3/d capacity, with the exception of Chevron and CHNC, a Vaca Muerta shale play-focused unit linked to national oil company YPF and Chevron. In addition, Chevron reduced by 4,000m3/d its awarded capacity, an amount that will be shared out pro rata among the other bidders.

Bidding parties were awarded 50% of volumes offered. To pay for the additional 14,000m3/d, Oldelval will use the same financing model as designed for the original 36,000m3/d project: proceeds from the sale of capacity (80%) and the issuance of bonds (20%). Contracts are due to be signed at the end of the month. 

Overall Argentine oil output averaged 95,800m3/d in September, up 1.7% month-on-month and 12.9% year-on-year, according to data in a General Mosconi energy think tank report. Unconventional oil output averaged 42,000m3/d, up 46.7% year-on-year. 

Almost all of the country’s shale oil and tight oil is produced in the Neuquén basin. Overall basin oil output was 58,100m3/d, up 26.6% year-on-year.

Pipeline and storage investment, along with high prices on the international market, is whetting the appetites of upstream firms. Argentina’s hydrocarbons production outlook is chiefly linked to the development of above-ground infrastructure to process and dispatch output. 

The country’s biggest province by production, Neuquén, said exports totaled 2.6Mb (million barrels), or 30% of its output, in September.