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ECONOMY | 22-04-2022 01:35

Argentina's government launches construction tender phase of mega gas pipeline

President Alberto Fernández launches tender for construction of game-changing gas trunk pipeline from the Vaca Muerta unconventional gas field in southwestern Argentina.

Argentina's government on Thursday launched the construction tender phase for a gas pipeline megaproject that will eventually extend more than 1,000 kilometres (621 miles) from the southwest to north of Buenos Aires.

If completed, the Gasoducto Néstor Kirchner, or Néstor Kirchner Pipeline, would be the largest natural gas project in Argentina in the last four decades and comes at a time when worldwide energy costs have shot up due to Russia's invasion of Ukraine.

The tender will be launched in May with a decision due in July.

The first stage of the project is due to cost US$1.5 billion, beginning in August and ending in 2024.

In an official ceremony at a YPF site in Loma Compana, part of the Vaca Muerta non-conventional oil and gas deposit in Neuquén Province, President Fernández celebrated "the start of work to create the Néstor Kirchner Pipeline."

The aim of the megaproject is to expand Argentina's fuel transport capacity for both domestic use and exports.

The first section of the pipeline, named after the late former president, will extend 558 kilometres from Tratayén, Neuquén Province to Salliqueló, Buenos Aires Province. It would increase gas supply by 22 million cubic metres a day, said the government. A second section will extend another 467 kilometres northwards, reaching San Jerónimo, 400 kilometres north of the capital.

In total, the new pipeline will increase Argentina's gas supply by more than 40 million cubic metre a day "supplying urban centres and industry in the centre and north of the country and giving the opportunity to export to Brazil and Chile," the Presidency said in a statement.

"The first objective of the pipeline is to replace imports, to replace all LNG [liquefied natural gas], and the second is to generate exportable amounts," said Energy Secretary Darío Martínez, who pointed out that last summer Argentina began exporting gas to Chile for the first time in 15 years, having reversed falls in production.

The Vaca Muerta deposit holds unconventional gas which is harder and more expensive to extract than more conventional natural gas. The site is currently being exploited by around 20 firms in total, including state energy firm YPF and US giant Chevron.

The US Department of Energy rates the Vaca Muerta field, which extends over 30,000 square kilometres in Patagonia, as the world's second-largest shale gas reserve, and fourth in the world for shale oil.

Extraction from the site has slowed down in recent years due to the fall in the price of crude which made it less profitable due to the high costs of hydraulic fracturing to extract unconventional gas. Argentina must still import gas from Bolivia (12 million cubic metres per day in 2021) and LNG to meet its needs.

YPF increased its unconventional gas production from 9 to 18 million cubic metres last year, said Pablo González, the president of the state firm, which was founded 100 years ago, privatised in the 1990s and controversially renationalised by then-president (and now vice-president) Cristina Fernández de Kirchner in 2012.

"Today there is a geopolitical situation that makes it possible for Argentina to accelerate the development of the energy sector. We face an opportunity that requires increasing infrastructure capacity, such as this pipeline," said Economy Minister Martin Guzman in a recorded message played at the event.

 

– TIMES/AFP

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