MercoPress. South Atlantic News Agency

Argentina boosting natural gas output and plans pipeline to supply Buenos Aires

Pipeline construction contracts valued at up to US$1.8 billion to transport natural gas from Vaca Muerta to Buenos Aires, announced Minister Gustavo Lopetegui

Argentina’s efforts to boost its natural gas output and supply are progressing through new pipeline and transport projects and auctions, moves that are expected to balance the country’s production and demand, the energy secretary said on Monday.

Pipeline construction contracts valued at up to US$1.8 billion to transport natural gas from Argentina’s largest producing region, Vaca Muerta, to Buenos Aires, could be awarded by September, Minister Gustavo Lopetegui said during a briefing at an energy conference in Houston.

The two phases of the pipeline could move up to 40 million cubic meters of production per day, more than half Vaca Muerta’s current gas production.

The Vaca Muerta shale play will require future investment of between US$ 5 billion and US$ 10 billion per year, from US$ 4.3 billion, now to accelerate its growth, Lopetegui said.

At least four projects in Vaca Muerta have passed from pilot phase to commercial development in recent months, he added. One incentive is the crude quality, which makes it exportable. Vaca Muerta’s crude production is expected to reach 100,000 bpd in the second half of the year versus 80,000 bpd currently.

The country also plans monthly auctions for offering domestic gas and will launch in May a separate four-year gas auction for offering winter gas at prices indexed to imported liquefied natural gas (LNG).

Argentina is a net gas producer with most output coming from Vaca Muerta, one of the world’s largest reserves of shale oil and gas. The nation now imports natural gas through a pipeline from Bolivia in a contract recently re-negotiated to set seasonal pricing and supply, and it buys costly liquefied natural gas (LNG) to cover its needs during the winter.

Argentina also recently took advantage of growing domestic gas production to resume gas exports to Chile and Brazil and is working to make the exports routine, he said.

To continue growing, Vaca Muerta needs greater investment in exploration and production and in pipelines, storage terminals, and railways to transport and ship crude and gas.