Page 5 - LatAmOil Week 21 2021

LatAmOil COMMENTARY LatAmOil

Nonetheless, several studies in recent years pandemic, as well as ongoing domestic political
have looked at the viability of building an LNG and economic issues. However, Pan American
plant in Argentina. This includes state-owned Energy’s Freyre said recent exports were a good
YPF’s move to explore the possibility of building basis for renewing relationships with buyers
a 5-10mn tonne per year liquefaction complex in regional markets – such as Brazil, Chile and
in Bahia Blanca. OIES estimated that in order to Uruguay – backed by the Vaca Muerta shale play,
produce 5-10mn tpy of LNG it would be neces- which still holds considerable promise despite its
sary to unlock firm feed gas supply of 21-42mn recent difficulties.
cubic metres per day, including roughly 10% of Certain developments in terms of regional
gas consumed in the LNG production process. exports are already underway, with Pampa
Using Argentine government supply and Energia, the country’s fifth-biggest gas pro-
demand projections released in 2019, OIES ducer, currently waiting for an export contract
estimated that the volumes necessary to feed a to be approved, according to its CEO, Gustavo
10mn tpy project operating at 87% of availability Mariani.
would only be available in the country by 2035. Exports are poised to grow now that the
By 2030, the volumes available for LNG exports Argentine government has authorised sales
could only feed a 2.5mn tpy plant operating at under fixed-term contracts instead of those that
full capacity, or a 5mn tpy plant operating at 60% can be interrupted if supplies are tight, accord-
availability, OIES continued. ing to Freyre. The new allowance is for exporting
The institute warned, however, that utilisa- during the warmer months, between October
tion factors of 60-80%, when accounting for the and April or May, but not in the winter months
impact of seasonal demand, would be below the of June-September, when the country imports
utilisation rates of the most competitive LNG LNG to meet domestic demand. One major
plants in the world, which run above 85%. Indeed, Argentina is now set to import more
“This is a common issue for countries with LNG over the coming months, in line with challenge for
strong domestic demand seasonality,” OIES said. seasonal trends. Demand is even higher than Argentina if it
“In order to solve this situation, it would be nec- expected this year, as activity rebounds from the
essary to invest in gas storage, divert gas from COVID-19 pandemic, and the country has com- is to develop
regional markets to the LNG plant or to develop missioned a second floating storage and regasi-
an LNG hub with fields, pipeline, LPG [liquefied fication unit (FSRU) to meet its import needs. new liquefaction
petroleum gas] processing plant and LNG plant The FSRU, provided by Excelerate Energy,
dedicated exclusively to exports.” will dock at the port of Bahía Blanca for 98 days capacity is the
from May 26, according to a previous announce- seasonal nature
What next? ment from the state news agency.
All of this makes the development of significant Any new liquefaction project would have to of its domestic
LNG export capacity all the more challenging. take these seasonal trends into consideration.
This is not helped by the fact that gas producers If Argentina is able to ramp up Vaca Muerta gas demand.
themselves are prioritising regional pipeline gas production sufficiently then the seasonal chal-
exports ahead of LNG exports. lenges can be circumvented, and indeed there
The country’s gas exports averaged 2.8 mcm are expectations that activity in the play will
per day in 2020, down from 4.2 mcm per day in now rise. However, there is no guarantee that
2019, according to Energy Secretariat data. The the country will be successful in growing its gas
decline came as Argentina grappled with chal- production given the high levels of uncertainty
lenges caused by the coronavirus (COVID-19) around economic and political conditions.™

Week 21 27•May•2021 www. NEWSBASE .com P5