Last Updated: 2018-09-12
Decrease Font Size Increase Font Size

BUENOS AIRES, Sept 12 (NNN-MERCOPRESS) -- Argentina's biggest natural gas transporter, Transportadora de Gas del Sur, and Texas-based Excelerate Energy, have signed a memorandum of understanding (MoU) to carry out an evaluation on the construction of the country's first gas liquefaction plant, as rising natural gas production fuels export prospects.

TGS and Excelerate will consider building the liquefied natural gas (LNG) facility in Bahia Blanca, a port city in southern Buenos Aires province, they said in a joint statement here Monday. They plan to complete the study by the end of the year, when the companies will share it with Government and industry leaders to decide the next steps.

Neither TGS nor Excelerate specified if the facility would be for floating or onshore. Excelerate already supplies the two floating storage regasification units which Argentina has for importing LNG -- one in Bahia Blanca and the other in Escobar, up the Parana River from Buenos Aires.

The idea is to, at first, use the facility during the summer to export gas, helping to underpin the production growth of Vaca Muerta, the country's biggest shale play, the companies said.

Production from the play is surging, helping to offset declines in maturing conventional fields. From January through July, 2018, gas production rose 4.9 per cent to an average of 128 million cubic metres/day from the year-earlier period, led by a 150 per cent increase in shale gas and 8.5 per cent in tight gas, according to the latest Energy Secretariat data.

Producers have expressed concern that without increasing demand -- the country consumes an average of 140 million cu m/d, the production growth could stall, forcing them to shut wells in the summer and re-open them when demand rises again in the winter.

The first step is to reduce gas imports, which averaged 32 million cu m/d, divided 60:40 between Bolivian pipeline supplies and LNG. The next step is to export. The government has negotiated a return to exporting by pipeline to Chile, starting this month.

Chile had imported up to 20 million cu m/d in the late 1990s and early 2000s, but Argentina reneged on its contracts after its production began dwindling in 2004, leading to shortages and a surge in imports.

Other options for export are Brazil and Uruguay, which have pipeline connections and used to import. But to really exploit the potential of Vaca Muerta, analysts and executives have said Argentina must target the global market.

Javier Iguacel, the country's energy secretary, has said Argentina could export about as much as Australia, the second-biggest exporter of LNG in the world. Iguacel has forecast a surge in gas production to 400 million cu m/d in 2030, making it possible to export 185 million cu m/d. Of the exports, about 120 million cu m/d will be on the LNG market, his forecast shows. -- NNN-MERCOPRESS