Argentina plans to spend about $1.8 billion on imports of liquefied natural gas (LNG) in coming months, its last big purchase before a key gas pipeline to be inaugurated from its massive Vaca Muerta shale region brings balance to domestic gas supplies, Energy Secretary Flavia Royon said on Wednesday.

Argentina sits on one of the world’s largest shale gas reserves, but the country has in recent years imported high volumes of fuels including LNG to generate electricity mainly due to lack of transportation for its own production.

Its energy deficit, estimated at some $5 billion last year, is set to ease with less requirements for LNG imports. The Argentine government also has begun removing energy subsidies to industrial and commercial customers to meet commitments with the International Monetary Fund.

“This will be the last year that Argentina makes a big purchase of LNG, which has already been agreed,” Royon told journalists on the sidelines of the CERAWeek energy conference in Houston. “In the coming years, (it will import) only to cover demand peaks.”

The country expects to pay an average price of $20.80 per million British thermal units (Btu) for the LNG imports this year, compared with up to $40 per million Btus in 2022, which forced a switch to power generation using other fuels, according to the secretary.

The South American country is in talks with funds from Saudi Arabia and China for financing the second phase of the gas pipeline from Vaca Muerta. The gasline’s first phase, needed to transport domestic gas to customers, is planned to be inaugurated in June.

“The energy transition is an opportunity for Latin America and particularly for Argentina,” Royon said.

Argentina also is engaged in talks with Brazil over gas supplies, both via pipeline and possibly by liquefied natural gas (LNG) cargoes in the future, as the Brazilian governments looks to diversify its sources and types of gas imports.

Argentina’s state-controlled YPF YPFD.BA and Malaysia’s Petronas are negotiating the first phase of a massive natural gas project that will include LNG production and exports, with final investment decision planned for 2024.
Source: Reuters (Reporting by Marianna Parraga)