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Argentina knocks on gas producers’ doors for pipeline financing -minister

Argentina is in talks with the country’s natural gas producers over financing for the second phase of a key pipeline to transport the fuel to consumption hubs, Neuquen province’s energy minister told Reuters.

A lack of drilling rigs and transportation from Argentina’s massive Vaca Muerta region, the world’s second largest shale gas reservoir, are creating bottlenecks and stalling the area’s output, which has recently reached historical records.

About $2 billion needed for the second phase of the Nestor Kirchner gasline could be raised by a mix of bank and private financing. The line’s first phase will begin construction later this year using state funds.

Negotiators on the second-phase project are exploring financing using “early purchases of (transportation) capacity,” Neuquen province’s Energy and Natural Resources Minister Alejandro Monteiro said this week on the sidelines of a Houston energy conference.

The federal government is responsible for securing another portion of the line’s financing, he added, possibly through loans or bonds.

Companies involved in the talks include YPF, Tecpetrol, Pluspetrol, Exxon Mobil, Pan American Energy, Pampa Energia, Wintershall Dea and TotalEnergies , the minister said.

The line’s first phase initially will carry 11 million cubic meters per day (mmcmd) starting in 2023, expanding to 22 mmcmd in early 2024.

State company IEASA has ordered the engineering design for the second phase, hoping to begin construction in 2024 and put it into service a year later, Monteiro added.

“For them (gas producers), the construction of that infrastructure is a condition to accelerate output,” he said. “There is interest in building it as fast as possible.”


By the time a contract to buy Bolivian gas expires in 2026, Argentina expects to have solved its transportation issues to replace those imports with fuel from Neuquen, which is being produced at half the price Argentina pays for Bolivian gas.

“It makes no sense that Argentina continues importing gas at $8-9 (per million BTU) if it can produce it at $4 (per million BTU),” he said.

Argentina also wants to expand gas sales to Chile. It will begin exports in October of a fixed seasonal volume of 10 mmcmd through April to that nation, and aims to sign a supply contract with Uruguay to regularize exports of another 200,000-300,000 cmd.

Its goal is gaining energy self-sufficiency and overturning a trade deficit that costs Argentina billions of dollars per year, especially in liquefied natural gas (LNG) imports.

An energy industry bill is expected soon to be submitted to Congress to regulate companies’ access to hard currency as part of the country’s foreign exchange system, while securing stability for export permits and a framework for LNG projects, according to Monteiro.

YPF and Malaysia’s Petronas signed an early agreement in September over unconventional gas output, transportation and LNG, their second attempt at an alliance.

“There is a 12-month deadline to green light that LNG project. The idea is to have the legal framework ready by then,” the minister said.

A separate legislation also plans to encourage investment in lithium, hydrogen and other forms of green energy in Argentina.
Source: Reuters (Reporting by Marianna Parraga; Editing by Chizu Nomiyama)

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