Snapshot: Argentina's US$3.5bn gas pipeline project

Argentina’s Néstor Kirchner gas pipeline megaproject has progressed.

President Alberto Fernández ordered state energy company Ieasa to “advance quickly” with a planned tender for first-phase work.

Federal energy department chief Darío Martínez told broadcaster AM550-La Primera that the government wanted to begin the tendering process by year-end and bring the duct into service by winter 2023.

Officials are analyzing whether to hold a national or international tender, BNamericas has learnt.

The proposed pipeline project would chiefly help ease a winter dispatch bottleneck at the Vaca Muerta shale play, where existing trunk infrastructure is nearing capacity as producers increase output. This would support higher production and, in turn, help the country substitute costly winter fuel imports and boost dollar-generating exports.

The administration of former president Mauricio Macri had tried to advance the tender process for the first phase in 2019, but plans were halted amid macroeconomic challenges that still persist. Fernández had scrapped the project in early 2021, saying that alternatives would be sought. 

“It’s a flagship and strategic project for our country through which it will be possible to supply the domestic market, replacing imported LNG, gaining self-sufficiency and energy sovereignty, positive for the trade balance and improving the subsidy system,” Argentine energy, technology and infrastructure think tank Oetec told BNamericas in an emailed statement.

“Then there is a lowering of the costs of local gas supply and allowing the creation of exports to the neighboring countries of Chile and Brazil.”

The government said that, via decree, it would increase budgetary funds for first-phase work by around US$400mn. Some US$180mn had already been assigned.

FIRST-PHASE WORK

The first phase involves pipeline construction work between Tratayén in Neuquén province and Salliqueló in the province of Buenos Aires (558km). Ancillary projects are included, among them construction of duct Mercedes-Cardales (73km), in Buenos Aires province. This would link Argentina’s northern and southern gas systems. 

Also planned is flow-reversal work on phases I and II of the Gasoducto Norte pipeline and expansion work on other ducts. Flow reversal would permit the transport of gas from the south to the north.

SECOND-PHASE WORK

The second phase would involve laying pipeline between Salliqueló and San Jerónimo in Santa Fé province (484km), further flow reversal work on the Gasoducto Norte pipeline and connection and compression work, including on the partly completed GNEA system.

HEADLINE FIGURES

The first phase would see capacity grow up to 24Mm3/d (million cubic meters per day). Overall transport capacity - taking into account both phases - would grow by around 44Mm3/d.

Both phases and the ancillary projects will require investment of US$3.47bn, according to an energy department presentation. The main duct will require US$965mn for the first phase and US$1.58bn for the second. 

The biggest ancillary project is expansion of the Centro Oeste pipeline, which has a US$160mn price tag.

SUBSTITUTING BOLIVIAN IMPORTS

Oetec said the project will “progressively meet the demands of the north which, today, is supplied by gas from Bolivia.

“In this sense, the gas infrastructure of transport companies TGS and TGN will be leveraged and the key GNEA boosted, also allowing for the supplying of the coastal and northeastern regions.” 

Output from Bolivia – which currently plays a critical role in covering Argentine demand in the north – is dropping. 

The overall project, Oetec said, “won’t only be important for the north but also for central Argentina.” 

It added: “In this sense, it will provide greater reliability and security in terms of meeting demand coming from the greater Buenos Aires area. And the southern part of our country will also be involved, since the enormous volumes of gas from the deposits of the Neuquina, Golfo San Jorge and Austral basins will be used.”

Past center-right administrations had overlooked the north, Oetec said.

THE CURRENT SYSTEM

Argentina has five main domestic gas transport pipelines and 10 export pipelines, connecting the country to Chile, Brazil and Uruguay. 

The chief domestic ducts are Gasoducto Norte and Gasoducto Centro Oeste, which belong to TGN; and Gasoducto San Martín, Gasoducto Neuba I and Gasoducto Neuba II, operated by TGS, British research body Oxford Institute for Energy Studies says in a report.

Total domestic pipeline system capacity stands at around 149Mm3/d, the report said. National gas production averaged 133Mm3/d in September.

According to federal gas regulator Enargas, Argentine gas imports this year spiked at 53.4Mm3/d on July 18. Bolivian imports accounted for 18.2Mm3/d, the Bahía Blanca LNG import terminal 15.6Mm3/d, and the Escobar LNG import terminal 19.6Mm3/d.

Gas imports averaged 23.5Mm3/d last year, up from 18.7Mm3/d in 2019.

In terms of international pipelines, seven connect to Chile and have combined capacity of 13.2Bm3/y (36.2Mm3/d). Two connect to Uruguay with combined capacity of 2.2Bm3/y and one connects to Brazil 1Bm3/y.

Providing year-round exports to Brazil and Chile on a firm basis would require greater winter output and regaining confidence after Argentina switched off the tap to Chile in the mid-2000s when its own supplies ran low.