In an important agreement to guarantee energy supply, Energía Argentina and Yacimientos Petrolófilos Fiscales Bolivianos (YPFB) signed the ninth addendum to the natural gas supply contract. This measure, which ensures the supply of gas to the north of the country during August and September, occurs in a context marked by the significant reduction of gas reserves in Bolivia, which affected the export capacity of the neighboring country.
The agreement will allow the provision of up to 4 million cubic meters per day (MMm³/d) of natural gas, meeting the needs of central and northern Argentina. This flow is vital while progress is made with the reversal of the Northern Gas Pipeline, a work that is projected to be operational by September 15. Once this phase is completed, a significant increase in transportation capacity is expected, with the addition of 5 MMm³/d to the existing supply. In a second stage, another 4 MMm³/d will be added, which will contribute to satisfying the growing energy demand of the region.
Context
The signing of this addendum occurs in a complex scenario for Bolivia. President Luis Arce announced last year that his country was facing a critical shortage of natural gas reserves, leading to the cancellation of exports to Brazil and Argentina. This event marked the end of the so-called “Gas Era” in Bolivia, a stage that for three decades sustained its economy through the export of this resource.
“Since 2014, there has been a decline in production, which unfortunately has been falling until reaching rock bottom. These gas reserves have not been replenished and the country therefore does not have the capacity to produce more“Arce reported.
Current Bolivian reserves are around 33.6 MMm³/d, with exports of 20 MMm³/d to Brazil and 6 MMm³/d to Argentina. However, this reduction in production capacity has left Bolivia with a significant deficit to cover its internal consumption, estimated at 15 MMm³/d, of which only 10 MMm³/d is available.
Impact on the Regional Energy Relationship
In other times, Argentina imported up to 20 MMm³/d of gas from Bolivia, generating a transfer of about 6 billion dollars annually in income for the neighboring country in 2014. However, the decline in Bolivian reserves and the lack of investments in exploration and new technologies have changed the panorama.
The opposition in Bolivia has harshly criticized the Arce government for focusing on the exploitation of existing reserves without allocating resources to the exploration of new deposits.
“Instead of exploring and seeking greater reserves, they dedicated themselves to exploiting, as a first measure, to be able to have resources. “Exploration has always been neglected,” expressed at the time the hydrocarbons expert, Hugo del Granado.
With the entry into operation of the renewed gas pipeline, a significant improvement in the availability of gas in Argentina is expected, reducing possible imbalances in supply and strengthening the country’s energy infrastructure.
Although the signing of this addendum not only ensures the gas supply for the next two months, it also highlights the importance of investments in infrastructure.
