Argentina plans to launch an auction “as soon as possible” for a project to boost natural gas takeaway capacity from the Vaca Muerta shale play, helping to boost domestic supplies to reduce imports of LNG and liquid alternatives like diesel, Energy Secretary María Tettamanti said Dec. 2.

The government issued a decree Dec. 2 authorizing the project, which is a private initiative of Transportadora de Gas del Sur, the country’s biggest gas pipeline operator. By law the government now must offer the project in a bidding round, with TGS holding the rights to better any offers.

“We are going to work on the auction now that the decree has come out,” Tettamanti said at Econojournal’s Energy Day conference in Buenos Aires. “We want to hold the auction as soon as possible.”

The project calls for investing $700 million to add 14 million cu m/d of capacity to the Perito Moreno pipeline, which delivers Vaca Muerta gas to Buenos Aires. The pipeline currently has 21 million cu m/d of installed capacity.

The additional capacity will save the country $700 million in energy imports during the winter, of which 70% will be LNG imports and the other 30% liquids, TGS CEO Oscar Sardi said at the event.

Argentina’s gas demand averages 140 million cu m/d, with lows of less than 100 million cu m/d in the summer and peaks of more than 180 million cu m/d in winter. With the country producing 150 million cu m/d, imports must be made to meet those winter spikes, including with LNG via a floating regasification terminal in Buenos Aires province. This gas is largely used by power plants, along with imports of diesel and other liquids as gas replacements.

Sardi said that once the project is awarded, construction will take 20 to 22 months.

“We’re playing against the clock,” he said in terms of having the pipeline in operation so that producers can increase output in Vaca Muerta to meet domestic demand and reduce imports. “We have to work quickly on this.”

A second leg of the project will add another 14 million cu m/d on TGS’s existing system with an investment of $200 million, a project that the company will handle on its own without the need for an auction, Sardi said.

Vaca Muerta holds an estimated 300 Tcf of resources, far more than the country’s 2 Tcf/year of demand. The huge potential is leading companies to start planning to export gas as LNG, starting as soon as 2027.
Source: Reuters