Argentina gas industry studying alternatives to supply Brazil

Argentina's natural gas industry is studying alternatives to ship more supplies to Brazil from the massive Vaca Muerta shale play in Patagonia, including via Paraguay as a new market, executives said May 9.

One option is to use the existing infrastructure in Bolivia to ship supplies from a connection in northwestern Argentina to the states of Minas Gerias, São Paulo and Rio de Janeiro in Brazil, Daniel Ridelener, CEO of the Argentinian pipeline operator Transportadora de Gas del Norte, said at the VI National Energy Forum organized by the business group LIDE in Buenos Aires.

Bolivia's gas production has been in decline over the past decade, leading Brazil to look for alternative suppliers. On May 6, executives of Brazil's state-run oil company Petrobras met with authorities in Neuquén, home to the brunt of Vaca Muerta's acreage, to discuss the potential of buying 34 million cu m/d of gas from the play.

The negotiations have stirred the gas industry in Argentina to consider the best options to move supplies there.

Ridelener, whose company operates a major gas pipeline in northern Argentina, said that going through Bolivia involves hurdles, including additional fees and regulations. This makes a second option more viable, which is to go from the center-east of Argentina via the Uruguaiana Pipeline to Porto Alegre in southern Brazil, he said.

The Uruguaiana alternative would allow for direct sales contracts between sellers in Argentina and buyers in Brazil, he said.

"This would make it easier to reach Brazil," he said.

A third option

However, Ridelener said a new possibility is to reach Brazil through Paraguay, which has recently proposed building a 1,000 km pipeline to supply its own needs and export the rest to Brazil. While building a new pipeline is expensive, it would make sense for Paraguay, given that it expects that it will need gas by 2030 to meet its power demand, Ridelener said.

"This is a new ingredient in the mix," he said.

The potential for Argentina is to supply some 20 million cu m/d to Brazil, given that consumption there is expected to rise to 75 million cu m/d over the next seven to eight years from a current 50 million cu m/d, he added.

At the event, Gabriela Aguilar, general manager of US-based LNG company Excelerate Energy in Argentina and Brazil, said that Brazil will be looking for more gas to supply its base-load power, given that potential droughts could limit output from hydropower dams, its main source of electricity. While Brazil imports on average 20 to 25 LNG cargoes per year, during a drought in 2022 it imported 90 cargoes.

"This shows the potential for Argentina to supply gas for base-load power in Brazil," Aguilar said.

Argentina's gas production has the potential to increase 60% to 226 million cu m/d by 2030 from 140 million in 2023, led by Vaca Muerta, as long as new takeaway capacity is built to move more gas out for export, according to a forecast from the Argentinian Chamber of Hydrocarbons Exploration and Production.