Argentina’s seasonal LNG imports are increasing following the arrival of Excelerate’s FSRU Exemplar at Bahia Blanca, just south of Buenos Aires. The first commissioning cargo already arrived at the FSRU which helps source additional supply for the southern-hemisphere 2021 winter season.
With a storage capacity of 150,900 cubic meters, the Exemplar was moored at Bahia Blanca GasPort on 27 May, and just one day later the terminal received its first LNG cargo.
Lease runs through August
In April, Argentina’s state-controlled YPF carried out what observers called “a hastily arranged tender” to supplement domestic gas production during the peak-demand winter period that start in mid-May. Excelerate won the tender for “seasonal regas service” and the lease for the FSRU is understood to run from late May through August.
Daniel Bustos, Excelerate's Chief Commercial Officer (CCO), said the return of the Exemplar continues the partnership with IEASA, Argentina state oil and gas producer IEASA and the distributor YPF. “We are confident the Exemplar can perform again with our local Argentine crew to support the country's energy transition and post-COVID economic recovery this winter,” he said.
US-based Excelerate developed the Bahia Blanca GasPort in 2008, and has also operated GNL Escobar, an LNG import terminal along the Paraná River, since 2011.
Seasonal exports to Asia
During the southern hemisphere summer, Argentina is exporting LNG - preferably to Asian utility buyers. Argentinean LNG, in fact, has lower shipping costs to Asia than rival US LNG, not least because they can avoid potential Panama Canal congestions. For utility buyers in Japan, Korea and China, cargoes from Argentina are becoming a “cheaper alternative”.
Supported by the Vaca Muerta, Argentina's production in the Neuquén basin will ramp up over the next few years to amount to 15 percent of the country’s gas production by 2024. Upstream costs keep falling, analysts say, anticipating projects in the condensate and dry gas window with breakevens below $3 per million British thermal units (MMBtu) will enter into full development in the upcoming years.
A lack of underground gas storage facilities close to demand means that gas flow to LNG export terminals will be seasonal. Based on the new research, Wood Mackenzie anticipates that LNG volumes could potentially reach 6 mtpa in that year, which could then grow to 10 mtpa by 2030.
Despite other price challenges posed by the seasonal utilisation of LNG plants, analysts estimate breakevens for Argentina LNG of $8 per MMBtu at delivery ex. ship for Japan.