MercoPress. South Atlantic News Agency

Argentina clinches deal to sell Vaca Muerta gas to Brazil

Caputo (L) and Silveira met on the sidelines of the G20 Summit in Rio

Argentina's Economy Minister Luis Toto Caputo and his Brazilian Energy Counterpart Alexandre Silveira signed Monday on the sidelines of the G20 Summit in Rio de Janeiro an agreement whereby gas from Vaca Muerta will be pumped starting next year, reaching 30 million cubic meters per day as from 2030, which is the same volume that South America's largest country used to buy from Bolivia.

 The document, which seeks to lay the foundations for the necessary infrastructure for the sale of Argentine gas from Vaca Muerta to Brazil, “is an unequivocal demonstration that, regardless of political positions, there must be a permanent dialogue,” Silveira told O Globo. Things between Presidents Luiz Inácio Lula da Silva and Javier Milei are not exactly rosy after derogatory remarks from the Libertarian leader during his electoral campaign. When they greeted each other at the G20 Summit, the tension was visible during the cold handshake.
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Effective as of 2025, two million cubic meters of natural gas will be sent to Brazil while representatives from both countries analyze the alternatives to reach 30 million cubic meters daily in 5 years.

Initially, the Bolivia-Argentina gas pipeline, once built to work in the opposite direction, will be used after modifications so that the fluid can go from Argentina to Bolivia and then reach Brazil through Gasbol, a structure connecting both countries dating back to the 1990s. Technicians are also contemplating other alternatives, such as reaching the Brazilian State of Rio Grande do Sul via Uruguaiana, an Argentina-Paraguay-Mato Grosso do Sul connection, and also feeding Rio Grande do Sul through Uruguayan territory.

“We want to increase gas supply in Brazil and consequently decrease the price. We need to treat gas as a transitional energy, increase the volume to lower the price and reindustrialize Brazil, generating more opportunities for our people,” Silveira wrote on X.

In his posting on Elon Musk's platform, Silveira also mentioned that the deal meant “cheaper gas for Brazil.” He also explained that: “I signed with the Argentine Minister of Economy, Luis Caputo, the memorandum of understanding to bring gas from Vaca Muerta to Brazil. The forecast is that Brazilian imports of natural gas from our neighbors will be made through five routes.”

Brazil presently buys gas from Bolivia, where a significant drop in output has been recorded. On the other hand, thanks to Vaca Muerta, oversupplied Argentina needs to place that production somewhere. Given its geographical location, Brazil appeared as the ideal customer. Otherwise, other buyers elsewhere should have become necessary. In addition, 70% of Brazil's energy stems from hydroelectric power plants, for generation is subject to weather variations, such as the current drought, the most severe in the past 74 years.

According to Buenos Aires' La Nación, gas sales to Brazil could reverse the trade balance between the two countries after selling 8% of Argentina's output to the neighboring nation.