Argentina is looking to reel in just over US$260 million to develop three gas pipelines to enhance supply throughout the central Pampas and Patagonia regions.
The country’s Energy and Mines Ministry announced a tender in early February for the acquisition and transportation of equipment to build Gasoducto Regional Centro II and expand capacity at Gasoducto de la Costa/Gasoducto Tandil-Mar del Plata and Sistema Cordillerano-Patagónico.
The Gasoducto Regional Centro is located in Santa Fe province and already operates at 100% capacity, which is why developing a new segment would supply growing demand to at least 34,000 new users.
The line is set to be connected to the Gasoducto del Noreste Argentino line, which is close to the town of Recreo in Santa Fe province, and run down to Gasoducto Regional Centro in the town of Sunchales.
As for the expansion of the Gasoducto de la Costa line closer to the Atlantic, the objective is to reach 84,500 additional users, while the Sistema Cordillerano-Patagónico adjacent to the Andes should cater to 22,000 new customers.
Three Argentinian companies, M. Royo; SIAT and Siderca, both Techint subsidiaries; and a Chinese company, Sinopec International Petroleum Service, have already presented their most attractive offers.
A commission from the Energy and Mines Ministry will analyze the bids before they are approved. The commission is expected to announce winning offers for compressors to be installed in the pipeline systems on April 6.
In parallel, industry has cheered President Mauricio Macri’s government announcements over the last few months, as more than a dozen operators have been waiting for much-needed reforms to kickstart mass operations at Vaca Muerta, the world’s second-largest shale gas reservoir.
Drilling costs are now just under US$40 per barrel and wells hover around US$8 million each, paving the way for increased activity and investment.
Similarly, the state oil company YPF has announced shared investments with partners on the order of US$500 million. Though the company aspires to meet Argentina’s energy deficit, analysts say it will take at least eight years for the country to reach energy self-sufficiency. And the government of Neuquén province, where Vaca Muerta is primarily located, announced it would tender six blocks last December.
Additional incentives include a subsidized sale price of $7.50 per million British termal units for natural gas produced through 2020. The government also has pledged to eliminate export duties for oil products.
Argentina was recently pressured to increase gas imports from other countries including Chile because Bolivia has not met its export commitments. Though Argentina is trying to cope with limited supplies, gas shortages have been felt during high demand months.
Securing gas supply is much needed, as experts expect demand from Argentina’s population and industries to continue increasing.