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As gas output spikes, Argentina aims to fast-track key pipeline

Argentina’s natural gas production surged 10% in March to hit a new monthly record, the energy minister said on Thursday, as the South American country’s rising shale output promises savings compared to more expensive liquefied natural gas (LNG) imports.

The government is betting on a major new pipeline project to help move the growing supply.

The jump in March output, compared to the same month last year, is especially good news as natural gas prices have spiked in the aftermath of Russia’s Feb. 24 invasion of Ukraine. Even before Russia launched what it calls a “special military operation”, Argentina’s cash-strapped government was already struggling to finance the costly imports.

Energy Minister Dario Martinez announced record March production at an event at the massive Vaca Muerta shale formation in western Neuquen province, alongside President Alberto Fernandez.

Martinez noted that the first phase of a new natural gas pipeline, designed to transport booming Vaca Muerta production, will allow the government to better satisfy domestic demand at a saving of more than $3.4 billion in LNG imports at current prices.

Consultancy Ecolatina estimates that Argentina’s energy deficit this year could reach $5 billion, up from about $1.6 billion last year, underscoring the country’s ongoing dependence on imports needed to power Latin America’s third-biggest economy.

Martinez added that next month the government will launch a call for bids for pipeline work, with contract awards announced in July and construction expected to start in August.
The first phase of the Nestor Kirchner pipeline, named for a former president, will connect Neuquen to Buenos Aires and is expected to be finished by mid-2023.

President Fernandez stressed the urgency of the two-phase $3.47 billion pipeline project, including the main trunk plus additional connections.

“Argentina needs it, because with each pipe that transports that gas, the sooner it reaches the center of Buenos Aires, the more opportunities it will give Argentina to grow,” said the leftist leader.

“Not only so that Argentines can have heat in the winter, but so that the industry can keep growing,” he added.

The first phase of the project will expand the pipeline’s maximum gas transport capacity to 24 million cubic meters per day, while the second phase will reach up to 44 million cubic feet daily, bringing Vaca Muerta’s supplies to Santa Fe province in the country’s northeastern corner.
Source: Reuters (Reporting by Eliana Raszewski and Walter Bianchi; Writing by David Alire Garcia and Stephen Coates)

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