Argentina’s EMESA to build hub to export crude to Chile: company

EMESA, the state-owned energy company of the Argentinian province of Mendoza, said Jan. 14 that it has signed a deal to build a storage and distribution center to export heavy crude to Chile, which will be a new market for the company.

EMESA will build the facility in Malargue, a city in the Andes foothills of the western province, according to a statement by the Mendoza government.

The facility will be used as a base for receiving, storing and shipping out crude, it said.

Some of the heavy crude produced in the province will be delivered to Chile via the Pehuenche Pass over the mountains by trucks, helping to expand its markets, EMESA president Pablo Magistocchi said.

This is important to sustain production growth from the area and avert disruptions from suspending output, he said.

Magistocchi said producers had to slow their production last winter (June-August) because of tight capacity in a pipeline used to deliver supplies to the nearby 105,500 b/d Lujan de Cuyo refinery operated by YPF, the country’s state-backed oil company. The new facility will also be able to ship crude to that refinery.

To reduce shipping costs by an estimated 50%, EMESA also plans to eventually use trucks that run on liquefied natural gas, the company said.

EMESA said it will supply the proposed facility with crude from fields it has a stake in but are operated by third parties. The operators are local companies Medanito, Pluspetrol and Roch as well as Colombia-based GeoPark.

Mendoza produced about 58,000 b/d of crude, or 12% of the national total of 474,000 b/d, in October, according to that latest data from industry group Argentina Oil and Gas Institute.

Mendoza has potential for increasing output of shale oil from Vaca Muerta, one of the world’s biggest shale plays. About 40% of the play’s acreage runs under the province in the south on the border with Neuquen, where most of the play’s development is underway due to its large number of service companies and the availability of infrastructure, including for exporting crude via the Atlantic or the Pacific.

Mendoza, however, also holds largely untapped heavy oil resources, which government officials there have said could prove to be a complement to the light shale oil for refinery crude blends. To encourage companies to develop these conventional resources, the government has introduced tax breaks for 40% of the investment that companies can repay when the wells that may have been shut in have resumed activity.
Source: Platts