The brake that the government of Milei put to public works, even for the transport of gas, will make the country continue to depend this winter of the import of gas to cover the demand for heating of households without interrupting the supply to the industry. The accounts made by the area experts indicate that the load of 20 LNG ships will be necessary to meet the supply to the domestic market this year, which will represent an expenditure of about three billion dollars. The additional paradox is that these imports will be operated through ENARSA (Argentine Energy Sociedad Anónima), the only company that is in a position to guarantee the concretion of that operation, before the Government concretizes its purpose of draining it.
To the interruption of the works plan for the laying of gas pipelines that the government of Alberto Fernández had launched, the action developed by President Javier Milei joins in this gas.
Milei’s commitment to move that plant to Punta Colorada (in Río Negro) to get that investment from the territory governed by Axel Kicillof, ended up collapsing the project. The investment, estimated at about 30 billion dollars, would have been perhaps the largest work with private funds in Argentine economic history. But Punta Colorada lacks basic connectivity, primary logistics and expensive infrastructure required to install there a liquefaction plant the size of the projected (which Bahía Blanca could offer), which led to discard the project.
Petronas retired not only from that project, but also sold its assets in Vaca Muerta (undoubtedly linked to the LNG project) to definitely leave the country. Despite some initial speculations, today it is clear that no one will assume the commitment that the Malaysian firm left vacant.
An alternative, Tecpetrol project in the area of the port of Bahía Blanca, with modular gas liquefaction units, designed for export but also to supply the domestic market, went to “review stage” or feasibility analysis.
In addition to involving a much lower volume of production in relation to the one represented by the YPF-Petronas project, in the sector they ensure that there is a deep discussion inside the Techint group oil company about its convenience. It even considers if it would not be a cheaper and practical alternative to point to a floating liquefaction plant, as plan Pan American Energy (PAE) and YPF. Alternative that appears with more chance to win the discussion.
Ship ahoy
The project headed by Pae took a new step this week when it was announced that it signed an agreement for the installation of a second liquefaction ship in the San Matías Gulf, province of Río Negro. This ship, called “MK II”, owned by Glacea LNG (Norwegian company based in Bermudas), is currently under construction in a shipyard in China.
It is estimated that he will reach the Argentine coasts in mid -2028 to start operations towards the end of that year. Together with the Hill Episeyo ship, which will begin operating in 2027, they will add a production capacity of 6 million tons per year of LNG (equivalent to 27 million cubic meters natural gas).
PAE, with a 30 percent participation, heads Southern Energy, the firm that associated with Glace British Harbour Energy (15%) and win (10%).
The initial advantage of the Pae-Golar project is that it will use the natural gas that comes by the San Martín Gas from South Patagonia as input, with a surplus transport capacity of 15 percent outside the winter months. With which, it does not need an extra gas pipeline from Vaca Muerta as other alternative projects, significantly lowering investment.
In this month of April, YPF specified in turn the signing of a contract with ENI, from Italy, for the contribution by the latter of two floating units for gas liquefaction from Vaca Muerta, on the Argentine Atlantic coast. Its initial production capacity would reach 12 million tons per year (twice as much as the Pae-Golar project). But, in this case, you need the gas pipeline from Vaca Muerta to transfer the input, plus the gas treatment and development plant in Neuquén before injecting it. In total, including the cost of the boarding plant, it is estimated that the investment to take the gas to the ships would be around 8000 million dollars.
ENI’s commitment is, in addition to contributing the ships, participating in each stage of the project (extraction, transport and liquefaction). Recall that the Italian firm, with partial state control, already has assets in Muerta Vaca deposits. In the concretion of this agreement there would be no foreign management done by Javier Milei before the Head of Italian Government (President of the Council of Ministers) Giorgia Meloni. The pretentious final objective is to expand the production capacity of the project from the project to 30 million tons per year during the 30s.
The bottleneck
For now, the ambitions of these and other projects under study (Tecpetrol, among them) collides with an unresolved restriction: the production capacity of Vaca Muerta to supply the explosive demand for gas of these projects together. Even Pae-Golar is thought with a future growth projection using gas from the exceptional Nequino site.
A key fact is that, one by one, the largest world oil companies participating in Vaca Muerta have been withdrawing through the sale of their assets, and of which several are already left out. This has to do with an international evaluation that “Vaca Muerta is a reserve of international hydrocarbons, but not on the first line.” In their translation: first -line companies have other more attractive alternatives (Guyana or Surinam, by case).
The neuquino exploitation field is left in local hands, or multinational consortiums but with Managementlocal t, such as Pae (Bulgheroni) or Vista (Galuccio). Is there enough capital available in these companies to face such an investment challenge? Are they capable, in a situation of limited international financing, to achieve the production goals required by the ambitious GNC export projects?
The experts in the field suggest that, given the conditions of exploitation of the shale gas (Production under unconventional method), which requires permanent perforations for wells with a much shorter useful life than conventional, the annual investment demand of Muerta Vaca is 12 to 15 billion dollars. The current one does not reach half.
This can be the main bottleneck. And its resolution depends not only on the projection of the most attractive business that the Argentine economy has today: it also defines who will control it.
