Argentina eyes ramping up gas exports to Brazil to fuel production growth
Argentina plans to boost natural gas exports to Brazil by up to 20 million cubic meters/day, Energy Secretary Daniel Martinez said late Jan. 4.
The move is seen as key for fueling production growth from the giant Vaca Muerta shale play.
"Argentinian producers are going to analyze the Brazilian market and see about the possibility of exporting between 10 [million] and 20 million cubic meters per day" to that market, Martinez said after a meeting with Daniel Scioli, the Argentinian ambassador to Brazil.
The focus of the exports will be to the southern states of Paraná, Santa Catalina and Rio Grande do Sul, he added in a statement.
The next step is to invite producers "to analyze the possibility," Martinez said.
Gas producers in Vaca Muerta, one of the world's biggest shale plays, have been lobbying for opportunities to increase exports, saying it is the only way to develop the huge resources. Argentina consumes an average of 140 million cu m/d, which is now largely met by local production of 125 million cu m/d and imports by pipeline from Bolivia and as LNG to a floating regasification terminal near Buenos Aires.
Any growth in the country's total gas production — it reached a most recent record of 144.4 million cu m/d in July 2020 — means that new outlets will have to be found for sales.
While some companies are working on plans to build a liquefaction terminal to export LNG to the global market, in particular Asia, they want to increase sales over existing pipelines to Brazil, Chile, and Uruguay in the meantime.
Argentina exported an average of 4.1 million cu m/d from January through October 2020, down from 5.1 million cu m/d in all of 2019, according to the latest data from the Energy Secretariat. Of the exports, only 250,000 cu m/d went to Brazil in the period last year, while 3.4 million cu m/d went to Chile, the data show.
Despite low sales to Brazil, there is the potential for growth, Rodolfo Freyre, vice president of gas and energy at BP-backed Pan American Energy, said last month at an Institute of the Americas seminar. He said that Brazil gets most of its imported gas from Bolivia, where production is in decline, meaning that Argentina can take advantage of that to increase sales to Latin America's biggest economy.
Bolivia's gas production fell to an average 48.84 million cu m/d in October from 57.89 million cu m/d a year earlier, according to data from the Ministry of Hydrocarbons. Of that, Bolivia has long-term contracts to export to Argentina and Brazil, both of which have been reducing purchases as they develop their own resources.
At the same seminar last month, Jose Luis Manzano, chairman of Integra Capital, an investment company with interests in the Argentinian energy sector, said that exporting regionally can allow for production growth from Vaca Muerta while a liquefaction terminal is built for global sales, a project that requires billions of dollars of investment and four to five years of construction.
