August 2019 – @alvaroriosroca – In our delivery in August 2017 we explained that it was very conceivable that the Southern Cone could have a surplus in natural gas supply. The above in based on the strong investments that were foreseen to obtain new production of natural gas in Brazil, Argentina, Bolivia and of course the arrival of very abundant and flexible LNG of several parts of the planet, very mainly of USA.
http://www.telam.com.ar/notas/201708/197388-superavit-gas-cono-sur.html, https://www.paginasiete.bo/inversion/2017/8/6/superavit-cono-sur-147313.html
Brazil had to resort to importing gas from Bolivia and also LNG for power generation. Argentina, due to failed policies in exploratory matters, had no choice but to import gas from Bolivia and also LNG. Similarly Chile resorted to LNG to be deprived of exports from Argentina. Uruguay opted for wind energy and oil derivatives because it could not conclude a terminal for regasification of LNG).
However, everything that happened only less than half a decade ago has already changed radically. Brazil begins to produce offshore gas and discovers the Pre-Salt (2005), where Petrobras and several private actors bet, bet and continue to bet huge economic resources and technology to produce oil mainly and that comes with plenty of associated natural gas.
The production of petroleum and natural gas has been increasing notably year after year and a large amount of gas from the Pre-Salt already enters in to the market and another portion (approximately 50%) must be re-injected due to reservoir conditions. Presalt associated gas must also be reinjected due to the lack of infrastructure from offshore fields. The restructuring of the natural gas sector towards a competitive market and lower prices in Brazil is underway, with the removal of Petrobras’ monopoly, privatizations and other measures, will bring even more gas from the Pre-Salt and also LNG to the market.
Vaca Muerta, in Argentina, has technically recoverable natural gas resources. A series of incentives, agreements with unions and better prices for gas at the wellhead have led to investments in pilot wells and some Factory drilling projects to produce oil and also natural gas, Vaca Muestra has gained competitiveness and efficiency and reduced production costs considerably. Argentina has resumed exports to Chile and Uruguay and is seeking to bring gas to Brazil and export LNG. Imports from Bolivia and LNG have also decreased markedly.
Bolivia, which had stopped its exploratory cycle, has reacted with a law of economic incentives and some regulatory decrees to attract new exploration, mainly from the private sector. Several exploratory prospects (9) are being and will be drilled between 2019 and 2021 to try to find new reserves and have new production. If the geology is favorable, Bolivia could have even more exportable and highly competitive gas surpluses with infrastructure to reach Brazil and Argentina.
A very fast natural gas balance for the second semester (August to December) of 2019 of the Southern Cone countries could be summarized as follows. Argentina with a production capacity of 135 to 140 million cubic meters per day (MMMCD), with exports in the order of 10 MMMCD and with gas surpluses of approximately 10 MMMCD
Brazil with an offer to the market of about 60 MMMCD and with surpluses of about 8 MMMCD this 2019. Bolivia’s gas demand for several months has been reduced to an average of 13 MMMCD.
Bolivia has production capacity this 2019 close to 56 MMMCD and needs for its internal market approximately 15 MMMCD. If Argentina demands 10 MMMCD (contract) and Brazil continues to demand 13 MMMCD this 2019 as it is doing, Bolivia will have surpluses of 18 MMMCD.
A total estimated natural gas surplus for the Southern Cone of about 36 MMMCD. Unthinkable only 5 years ago.
*Former Minister of Hydrocarbons and current Managing Partner of Gas Energy Latin America.