December 2021 – @alvaroriosroca – After much to-ing and fro-ing, the Argentine government finally launched the approval of the bidding process for the construction of a system of new gas pipelines and modifications/reversions to existing pipelines, called Transport.Ar. It is planned to be executed in two stages, between 2021 and 2023, to bring natural gas from Vaca Muerta to several points of the country and save a lot of “guita” in importing LNG, gas from Bolivia, fuel oil and other energy products.
An estimate for 2022 is that the Argentine Treasury will have to take out of its pocket some US$ 17,000 MM to import energy and subsidize energy. This is a very delicate sum for a country where dollars are too scarce. Of this amount, approximately USD 9,000 million are to import energy. If the gas pipelines are not built, these imports will be repeated year after year, which is not a desirable situation for the tango country.
But the decisive blow for the Argentine government to accelerate the construction of gas pipelines and modifications, and to take resources from where there are none, is the decline of natural gas production in Bolivia. This means that the supply of gas to the north of that country is decreasing and forces Argentina to import more LNG through northern Chile and more oil derivatives to the north. This would increase energy imports even more and would evaporate a number of dollars that do not exist.
The first stage foreseen is the construction of a new gas pipeline between Tratayen and Saliquelló (Gasoducto Presidente Néstor Kishner), with improvements and expansion of capacity and connections with other gas pipelines, including partial reversal of the TGN pipeline that will take gas in the opposite direction towards the north of Argentina and supply part of the unsatisfied demand of that area.
An investment of US$ 1,500 million is estimated for this phase, which according to official information would be carried out between the remainder of 2021 and 2022. We will be more realistic and hope that it can be implemented between 2002 and most of 2023, with financing available of course.
The second stage aims to complete the Nestor Kishner Gas Pipeline between Saliquello and San Jeronimo and upgrades, extensions with loops and compersion and connections of several other pipelines, including the completion of the reversion of the TGN pipeline to stop importing gas from Bolivia.
This second stage would require a total investment of approximately 1,900 MMUSD to make a total of approximately 3,400 MMUSD in the two stages in gas pipelines in Argentina. The magic question now is where to get the resources in a country without reserves? The Argentine government is designing a financial structure that intends to scrape funds from everywhere, including items from the 2021 and 2022 budgets, the contribution to large fortunes and direct financing from the Argentine treasury and others. Finally, they indicate that this second stage would be implemented during 2023, which can happen as long as resources are available.
In our opinion, these new pipelines and their extensions in Argentina are highly positive. Not only will they alleviate billions of dollars in LNG, fuel oil and other energy imports in Argentina in the coming years, but there may also be regional benefits, if they act with integration and intelligence criteria. The reversion of TGN could be used to move gas from Vaca Muerta to northern Chile and also to Brazil (which is in a kind of supply crisis) through pipelines that are becoming idle in Bolivia and Brazil.
Let us remember that using regional gas is an important source of taxes, royalties, employment and income from the transportation of gas through pipelines already built with a high degree of depreciation throughout the region. Keeping them empty is the option that should not happen. The first three months of 2022 will speak about the reality of this important decision in Argentina.
- Former Minister of Hydrocarbons of Bolivia and current Managing Partner of Gas Energy Latin America.