Argentina races to ensure winter gas supply

Argentina is racing to ensure wintertime gas supply with a planned tender for the short-term lease of a regasification vessel and an auction for more subsidized domestic natural gas.

Argentina's demand for natural gas soars in the winter because the fuel is used for heating, and there is growing fear of imminent shortages as domestic production still has not fully recovered from a 2020 decline.

The energy secretariat has called on state-owned energy company Ieasa to carry out an international tender for the lease of floating storage and regasification unit (FSRU) for Bahia Blanca covering the winter period of 1 June and 31 August.

State-controlled YPF will be tasked with analyzing all the offers on behalf of Ieasa, according to the energy secretariat.

Argentina had imported LNG through Bahia Blanca for a decade until late 2018, when former president Mauricio Macri bid a ceremonious farewell to Excelerate Energy's 150,900m3 Exemplar FSRU in what was meant to be a a signal of the country's rebirth as a booming gas producer. But Argentina's shale play has not met expectations, and the country still has an LNG import terminal in Escobar. Both Bahia Blanca and Escobar are in Buenos Aires province.

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Separately, Argentina launched a new auction today to supply extra wintertime gas as a supplement to a program that was implemented last year to supply power generators in 2021-24.

Although the government awarded 67.42mn m3/d at an average price of $3.5/mn Btu in December, the results fell short of official expectations, particularly when it came to the critical winter months.

In the auction, Argentina is seeking additional supply in May-September from two southern basins, with different requirements for each month. The peak is in July when the auction will seek to award up to 17.59mn m3/d from the Neuquen basin and 8.46mn m3/d from the Austral basin.

The maximum gas prices will be 30pc higher than the median obtained in the last auction. That translates into $4.64/mn Btu for Neuquen gas and $4.46/mn Btu for Austral gas.

Unlike the previous auction, companies can offer gas for this winter alone, rather than for the subsequent winters of 2022-24 as well.

Bids are due on 2 March and awards will be made on 10 March.

"This second round is basically meant to secure the largest possible volume of Argentinian gas for the winter peak to save as much as possible on imported gas," energy secretary Dario Martinez said.

Argentina's gas needs are also met by Bolivian pipeline imports and seasonal regasified LNG from Chile. The former has been falling because of Bolivia's declining output.

Argentina's gas production fell by 8.6pc year on year in 2020 to 123.2mn m3/d (4.35bn cf/d).

By Daniel Politi