Argentine Gas Flowing Again to Chile
Argentina has resumed natural gas exports to Chile for the first time in 11 years after bilateral discussions between Argentine president Mauricio Macri and his Chilean counterpart, Sebastian Pinera, resulted in an agreement to strengthen energy integration between the two countries, Chile’s energy minister announced October 30.
“Argentine natural gas can play an important role in the decarbonisation of our country,” Chilean energy minister Susana Jimenez said in a ministry statement.
The agreement between Argentina’s General de Combustibles (CGC) and Chile’s Colbun SA will allow for natural gas shipments between October 1, 2018 and April 30, 2019, and considering the high seasonality of Argentine demand, the possible export of surplus Argentine gas to Chile during summer months.
The agreement will be enforced to the extent that Argentine domestic supply is not compromised. Maximum volumes to be exported, based on the agreement, have been capped at 1.3mn m3/day, according to the ministry.
Conventional gas from Argentina’s Austral and Neuquen basins will be shipped along the GasAndes Gas Pipeline, which stretches 463 km from Mendoza, Argentina to San Bernardo, Chile. Once in Chile, the gas will be redirected to the Colbun Nehuenco complex located in the Valparaíso Region and destined for industry, electricity generation and methanol production.
Argentina has the world’s second largest recoverable shale gas resource, estimated by the US Energy Information Administration at some 802 trillion ft3, but currently imports gas during the winter since its own production doesn’t yet meet domestic demand.
Argentina’s government projects continued investments in shale developments, especially in the Vaca Muerta formation, will allow the country to boost gas production to cover domestic demand by 2020, and export surpluses year-round, Argentina’s former energy minister Juan J. Aranguren during a Houston conference earlier this year.
So far, at least eight companies have initiated negotiations to purchase Argentine gas from producers or marketers. By 2025, all of Chile’s current natural gas consumption, nearly 15mn m3/day, could be supplied by Argentina, Chile’s energy ministry said.
“In the short term, the main opportunities in Chile are to replace LNG supply at more competitive prices, particularly for the residential and industrial sectors, and for electricity generation during the summer period,” Ricardo Irarrazabal, Chile’s energy sub-secretary, said in a ministry statement.