MercoPress. South Atlantic News Agency

Argentina gradually organizing natural gas production and consumption priorities

“It's probable that we will continue importing regassified LNG from Chile in the winter” to meet peak demand, Aranguren said

Argentina plans to increase natural gas exports to Chile, helping to encourage production growth in the giant Vaca Muerta shale play, while importing supplies from that country to meet peak demand, Energy Minister Juan Jose Aranguren said on Thursday.

“It's probable that we will continue importing regassified LNG from Chile in the winter” to meet peak demand, Aranguren said on the sidelines of The Economist's Argentina Summit in Buenos Aires. At the same time, he expects Argentina will continue exporting gas during the December to February summer, when it runs a surplus due to low demand.

“There is going to be increasingly more energy integration” between the neighboring countries, he said.

Argentina's government allowed gas exports for the first time to Chile last year through swap deals after more than a decade of virtually no deliveries. Argentina had been the main gas supplier to Chile in the late 1990s to 2005-06, shipping around 20 million cu m/d. But Argentina halted the deliveries as its production tumbled from a peak of 143 million cu m/d in 2004, causing shortages and a surge in imports.

Argentina's gas production has since recovered to 122 million cu m/d from a 16-year low of 113.7 million cu m/d, led by the development of Vaca Muerta and other unconventional plays, according to Energy Ministry data. When accounting for supplies that don't reach the gas grid, total available production is 110 million cu m/d, Aranguren said.

The output is still shy of the 140 million cu m/d of average consumption, with peaks of 180-185 million cu m/d in the winter. It makes up the deficit by importing around 30 million cu m/d, mostly from Bolivia and off the LNG market, with an additional 5 million cu m/d or so coming from Chile in the winter.

“Our goal is to produce 140 million cu m/d and import 10 or 15 million cu m/d instead of 30 million cu m/d,” Aranguren said.

This will help producers to continue to build production, as they will need a market for the output during the summer, when domestic demand sags. “They have to sell the output somewhere, and Chile is a destination for our production,” he said.