LNG

Argentina’s President-elect Javier Milei has offered the post of President and Chief Executive of state-owned energy company Yacimientos Petroliferos Fiscales (YPF) to Horacio Marín, an industry veteran and shale drilling expert who is a petroleum engineering graduate of the University of Texas.

Excelerate Energy Inc., the specialist US company for LNG floating storage and regasification projects from South America to the Nordic region and South Asia, has posted strong earnings as its cargo trading portfolio continues to grow.

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.

The governments of Argentina and Bolivia confirmed a new pipeline natural gas agreement with the Argentinians saying they would save foreign exchange reserves with the Bolivian gas and would have to buy 14 fewer LNG cargoes to meet their needs.

Argentine President Alberto Fernandez and his Bolivian counterpart Luis Arce reached a deal in talks in Buenos Aires for Bolivia to export 14 million cubic metres of natural gas per day to Argentina during the Southern Hemisphere winter season.

A joint statement said that the price of the Bolivian supplies was set at US$12.18 per million British thermal units.

Argentina’s Energy Secretary, Dario Martínez, said the Bolivian provisions would mean about 14 fewer cargoes of LNG would have to be purchased at high price and would save Argentina around US$770 million in LNG import costs.

“This is good news for Argentina, for the Central Bank’s dollar reserves and for the government’s fiscal plan,” said Martínez in a statement.

Analysts note that Argentina has suffered from an ailing economy and has been unable to meet investment needs to monetize its huge shale oil and gas resources.

A Bolivian Government statement later said the provision of gas in 2021 from Bolivia to Argentina was established at 14 million cubic metres er day, in winter, and for the rest of the year at 10 million cubic metres and this would be repeated.

Possible increase

“The President of Bolivia Luis Arce agreed with his Argentine counterpart, Alberto Fernández, the sale of natural gas and promised to give priority to its neighbour in case there is a greater production of natural gas on the Bolivian side,” added the statement.

“We are making an effort to maintain the levels of past gas supply to the Republic of Argentina and with additional gas that may be produced in Bolivia,” declared the Bolivian President.

Bolivia added that specific mechanisms between the Bolivian and Argentine state energy companies, Yacimientos Petrolíferos Fiscales Bolivianos and Argentina’s IEASA (Integración Energética Sociedad Anónima) would benefit both countries.

“The Argentine and Bolivian presidents agreed on the importance of realising concurrent actions so that the contract of Purchase and Sale of Natural Gas between YPFB and IEASA, reflects a new régime,” added Bolivia.

“It guarantees the supply of 14 million cubic metres, giving priority to making available additional volumes in the winter period as well as waiving the rights and obligations through to 2025, whose effect will be entrusted to the responsible Ministries and departments in order to draft the corresponding documents,” it added.

“The Presidents further agreed to advance in the study of investment opportunities for YPFB in the Vaca Muerta Shale basin in Argentina, working jointly to identify the alternatives for supplying liquid fuels in order to secure the energy security of both states,” stated Bolivia.

Global commodities firm Trafigura is helping lead the investment revival in the Vaca Muerta Shale Basin in Argentina where energy investment has lagged other nations as well as dropping during the Covid-19 pandemic.