Argentina Achieves Energy Independence with Record-Breaking Year-End LNG Imports
- 10-Mar-2023 5:16 PM
- Journalist: Gabreilla Figueroa
Argentina [US]: Argentina is set to make one of its last big imports of liquefied natural gas (LNG) worth approximately $1.8 billion in the upcoming months, according to Energy Secretary Flavia Royon. This is being done amidst expectation that the inauguration of a large-scale gas pipeline from the sprawling Vaca Muerta shale region will bring balance to domestic gas supplies.
Argentina is home to considerable total shale gas reserves but has had to rely heavily on external sources of fuel - including LNG - for producing electrical power due to limited transport infrastructure for its homegrown production.
Argentina is expected to reduce its energy deficit by $5 billion this year, as the government has begun removing energy subsidies for commercial and industrial customers in order to meet commitments with the International Monetary Fund. This should allow the country to reduce its dependency on LNG imports and create a more sustainable energy system.
"This will be the last year that Argentina makes a big purchase of LNG, which has already been agreed," Royon stated. "In the coming years, (it will import) only to cover demand peaks."
The South American country is expecting to pay an average price of $20.80 per million British thermal units (Btu) for its liquified natural gas imports this year, a stark difference compared to the expected up to $40 per million Btu in 2022 that caused the switch to fuel other power sources.
The country has engaged in talks with investors from Saudi Arabia and China to finance the second phase of the gas pipeline from Vaca Muerta, which is planned for June 2021 inauguration. This first phase will be used to transport domestic gas to its customers.
"The energy transition is an opportunity for Latin America and particularly for Argentina," Royon stated.
Argentina and Brazil are in active negotiations for the exchange of gas supplies. YPF, the Argentine state-controlled energy company, is collaborating with Malaysia's Petronas to execute a massive natural gas project expected to include LNG production and exports. This project has a planned final investment decision date of 2024.