Page 16 - LatAmOil Week 38

LatAmOil ARGENTINA LatAmOil

Production from Vaca Muerta in July dropped Vaca Muerta formation. The government hopes
y/y to 1.14 bcf (32.28 mcm) per day from 1.23 that the payments, which are due to benefit local
bcf (34.83 mcm) per day. The largest producers firms Tecpetrol and CGC the most, are key to
in Vaca Muerta in July were Argentina’s Tecpet- plugging a looming supply gap next year.
rol, followed by state oil firm YPF, and the local The Fernandez administration is concerned
subsidiary of French major Total. about the medium-term impact of recent low
Argentina has had one of the strictest lock- levels of gas production in the South American
downs in place globally since the pandemic country.
started. As a result, its oil sector has virtually Energy officials have warned that the coun-
ground to a halt. In April, for example, there try’s domestic gas supplies may fall short of
were no rigs running. Since then, though, meeting winter demand by up to 30 mcm per
upstream activity has been slowly picking up. day in 2021 if output remains at current levels.
In June, the government of President Alberto In turn, strong domestic demand could force
Fernandez said it had agreed to resume pay- Argentina to import greater volumes of LNG,
ments worth $250mn on a subsidy programme a move that would put further pressure on the
that helps a number of natural gas blocks in the country’s import-export balance. ™

PowerChina in talks to build

rail line for Vaca Muerta oil, gas

POWERCHINA, a state-run Chinese engi-
neering, procurement and construction (EPC)
contractor, is in talks on the construction of a
railway line to transport crude oil and natu-
ral gas from Argentina’s Vaca Muerta shale
formation.
Tu Shuiping, PowerChina’s president for
Argentina, said his firm had offered to build a
railway that could take oil and gas from the for-
mation to the port city of Bahia Blanca, around
half way down the country’s Atlantic coast,
according to a Reuters report. To this end, he
said, the Chinese company, which has 14 active Many Vaca Muerta fields are producing less (Photo: Neuquén Informa)
projects in the country, is in talks with Argenti-
na’s state-owned rail entity ADIF, said Tu. a subsidiary of BP (UK) are all participating in
“There is a concrete plan that we have been Vaca Muerta projects.
working on for almost two years,” he said in an In recent months, Argentina’s state-run YPF
interview with Reuters. “We were talking with and a number of private firms (including some
people from ADIF to see how the project can be of the foreign players named above) have cut oil
presented and then seek joint financing.” production in Vaca Muerta. They have justified
Tu also stated that the railway line would act this move by pointing to the fact that demand
as a crucial link between the shale region and a has fallen off during the lockdown imposed
nearby petrochemical and refinery hub. It could to try to curb the spread of the coronavirus
also be used to ship sand for fracking and food, (COVID-19) pandemic.
he said. Development of Vaca Muerta has in the past
A spokesman for Argentina’s Ministry of been held back by a lack of infrastructure. Indus-
Transportation told Reuters that “there is dia- try players say that new roads as well as railway
logue with many companies” for developing lines need to be built in the region, which is in a
infrastructure at Vaca Muerta. He also stressed, remote part of Argentina, to avoid bottlenecks
though, that plans for moving forward were still for the transportation of equipment.
not finalised. The Latin American country has long been
Vaca Muerta is around the size of Bel- keen to attract investment to try to counter its
gium and contains around 308 trillion cubic energy shortages, but was isolated from global
feet (8.722 trillion cubic metres) of shale gas financial markets for years.
and 16.2bn barrels of oil, according to the US Vaca Muerta would require an investment
Energy Information Administration (EIA). of around $200bn to plug the country’s energy
Royal Dutch Shell (UK/Netherlands), Total shortages, according to government calcula-
(France), ExxonMobil (US), Chevron (US) and tions. ™

P16 www. NEWSBASE .com Week 38 24•September•2020