Page 6 - LatAmOil Week 29

LatAmOil COMMENTARY LatAmOil
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SHALE gas fields in the Vaca Muerta Basin produce much more abundantly in the warm period between October and March or April, so the country o en experiences a supply glut during this part of the year. By contrast, it typ- ically needs to import both LNG and pipeline gas during the cooler months between April or May and September, when demand is higher and domestic production is lower.
Time to tango
Happily, technology – in the form of oating LNG (FLNG) facilities – has given Argentina an opportunity to ride out these uctuations and take advantage of the oversupply conditions that prevail during the warmer months.
Before shale gas ows upended its thinking, Argentina’s interest in FLNG capacity centred mostly on oating storage and regasi cation units (FSRUs) – that is, in import facilities. It had two FSRUs in place and was considering a third when it realised that it ought to start building up its export capacity. Accordingly, it released the Bahia Blanca GasPort, an FSRU provided by Excelerate Energy, and brought Belgium’s Exmar in for the Tango FLNG project.
e facility has a capacity of 500,000 tonnes per year (tpy) and is operating under a tolling contract. It is due to remain in operation for a period of 10 years.
Exmar delivered the Tango LNG unit to Argentina in February of this year and then announced the commissioning of the unit in June, with the delivery of a 25,000 cubic metre cargo from Vaca Muerta elds. e facility is likely to come fully on stream a er Argentina’s winter season, but it is not big enough to elimi- nate the need for imports just yet. e country is therefore likely to continue importing LNG during the cooler months, at least for the time being.
Nevertheless, the Argentinian government has previously said it intends to halt LNG imports by 2020-21. It is already taking steps in this direction, as is evident from the fact that the yearly period of imports has grown shorter. ( e country used to import gas from March or April until October.)
Opportunity knocks
Exmar pointed out when it commissioned the Tango LNG facility that the project had come to fruition in record time. This was no idle boast, given that it only signed on to the plan in November 2018.
e Belgian company attributed its quick progress to co-operation with Argentina’s national oil company (NOC) YPF, but it was also a matter of opportunity. The vessel was originally built for Pacific Exploration and
Production (PEP) under a deal signed in 2012 for exports from Colombia. PEP went into bankruptcy in 2016 and the vessel was deliv- ered in 2017. As a result, Exmar was eager to explore alternative options for its vessel. ( ere was even a suggestion that it might put the unit to work in Iran.)
In any event, this rapid turnaround would have been unthinkable 10 years ago – not just for the FLNG facility, but for Argentina itself. Even so, the country’s switch from net importer of gas to net exporter is happening, and more change will come as development expands in Vaca Muerta.
Indeed, YPF took another step in that direction last week by signing a pre-front-end engineering and design (FEED) services con- tract with the US company McDermott Inter- national on another gas liquefaction unit. e contract, which may be worth up to $50mn, calls for McDermott to draw up plans for a 5mn tpy LNG plant, with the potential for expanding the capacity to 10mn tpy. Since the facility will process gas from Vaca Muerta elds, it will help push development forward in that vast shale formation. ™
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Week 29 24•July•2019