LNG

Argentina said it was prepared to follow through with a pledge to remove investment uncertainties for foreign energy companies, especially in the construction of liquefaction natural gas export plants as the South American nation moves to develop its huge shale-gas reserves.

International companies including US majors see huge potential for Argentina from feed-gas brought to the coast from the huge Vaca Muerta shale basin containing one of the world's largest unconventional gas reserve.

Economy Minister Sergio Massa said in a speech to business leaders that the Government in Buenos Aires was preparing an LNG investment bill to send to Congress.

The Minister was accompanied at the event by the Secretary of Industry and Productive Development José de Mendiguren and the Secretary of Energy Flavia Royon,

Also present was Pablo González, President of Argentine state energy company Yacimientos Petroliferos Fiscales (YPF), which has various LNG development and shale gas and oil projects planned and had previously overseen the nation’s small-scale trial in LNG exports.

“If one looks at the reports of the most prestigious analysts in the energy sector, they envisage that in the next few years we are not only going to stop being importers of our energy, we are going to be a big player with our product,” declared Minister Massa

Protections

Massa said he hoped Congress would discuss the LNG Bill in the coming sessions. He stated that the Bill on investments in LNG plants was necessary to help the nation monetize its huge reserves and become a net energy exporter as import costs rise.

The Minister admitted that the consequences of the war in Ukraine had been having a big impact on Argentina’s energy import costs for all fuels and fertilizers.

“This final result of the year on the impact of the war shows us a negative balance of between US$3.70billion according to the IMF and US$5.20Bln, according to Argentina,” said Massa.

He said that Argentina must honour its commercial commitments just as the counter-parties must honour theirs.

Argentina has previously had the “Tango FLNG” production vessel at the Bahai Blanca port in Argentina to briefly be an LNG exporter.

The “FLNG Tango” vessel formally started its operations in Argentina in mid-2019 and a 10-year charter term began in September 2019 with Belgian shipping company Exmar.

The winter season then started in the Southern Hemisphere and liquefaction activities were stopped by YPF in May 2020.

Exmar first announced a YPF “force majeure” for the vessel on June 25, 2020, amid a dispute over various issues and the vessel departed.

“We need a great national agreement which in the next 30 years would bring core values ​​such as fiscal balance, competitiveness, accumulation of reserves and economic development with inclusion,” stated Massa.

The minister highlighted various possibilities whereby citizens and businesses had to advance with new measures that have “a full impact on the energy field and the knowledge economy” in Argentina.

Exmar, the Belgian shipping company with more than 40 vessels in its fleet now mostly focused mainly on the liquefied petroleum gas business, said the its “Tango FLNG” vessel chartered to Argentina was set to export its third cargo as the company’s finances also improved.

A US government report outlines a rise in Argentina’s domestic natural gas production noted over the past three years, largely because of increasing production from the Neuquén Basin’s Vaca Muerta Shale and tight-gas play, while the nation has also started LNG exports.

“As production has grown, Argentina has resumed exporting natural gas by pipeline to neighboring Chile and Brazil and has started exporting liquefied natural gas,” said the report from the US Energy Information Administration.

Production from Vaca Muerta Shale surpassed 1.0 billion cubic feet per day (Bcf/d) in December 2018 and Argentina’s first LNG export cargo was shipped on June 6 from the offshore Tango floating liquefaction unit, according to the report.

“The growth in Argentina’s shale and tight gas production has partially offset declines in its natural gas production from mature fields,” said the EIA.

However, output from Vaca Muerta now accounts for about 23 percent of Argentina’s total gross natural gas production.

“The Vaca Muerta shale formation has technically recoverable resources of 308 trillion cubic feet of natural gas and 16 billion barrels of oil and condensate within 8.6 million acres, and it is geologically comparable to the Eagle Ford shale play in southern Texas,” stated the EIA.

“Only 4 percent of Vaca Muerta’s acreage has entered the development phase so far,” the report added.

“Argentina’s domestic natural gas production exceeds consumption during warmer months, from October through April, though production is insufficient to meet demand during colder months, May through September, which requires Argentina to import natural gas by both pipeline and as LNG,” explained the EIA.

“Because Argentina doesn’t have geologically suitable formations to serve as large-scale natural gas storage facilities, natural gas producers have to shut in surplus production to accommodate seasonal consumption patterns,” said the report.

“Argentina is conducting feasibility studies to identify potential natural gas storage sites,” it added.

From 1990 through 2007, Argentina was a net exporter of natural gas. Since then, Argentina has been importing more natural gas both by pipeline (mainly from Bolivia) and as LNG.

Argentina imports LNG using a floating storage and regasification vessel (FSRU) moored at the Escobar port near Buenos Aires.

In the last two years, with the growth in domestic production, Argentina has been importing LNG only during cooler months, March through October.

“Argentina will likely continue importing LNG during cooler months until additional pipeline infrastructure is built to deliver growing shale production to major demand centers,” said the US report.

“Argentina’s seasonal demand patterns, the opposite of countries in the Northern Hemisphere, allows Argentina to export LNG during months when major consuming countries in Asia are importing more LNG,” it added.

Natural gas from Vaca Muerta is transported by an existing pipeline network to the port of Bahía Blanca, where it is liquefied at Tango FLNG, a floating production barge chartered from Belgian shipping company Exmar.

“These pipelines were previously used to transport imported LNG from an FSRU moored offshore at Bahía Blanca,” said the EIA.

“Tango FLNG has an LNG production capacity of 500,000 metric tons (0.07 Bcf/d) and is expected to produce up to eight LNG-export cargoes per year,” it added.

“Future growth in LNG exports will require additional investments in onshore liquefaction facilities and pipeline infrastructure or the use of additional floating LNG-production vessels,” stated the US report.

Argentine oil and gas producer, Yacimientos Petroleiferos Fiscales (YPF), said it was loading its first shipment of liquefied natural gas for export at the “Tango FLNG” facility deployed at the port of Bahia Blanca.