Argentina gas supply auction draws thin response

Argentina's supplemental auction for wintertime natural gas supply at government-subsidized wellhead prices drew a thin response from domestic producers.

The low number of offers highlighted the risk that Argentina will not have enough gas to meet a seasonal demand spike that usually starts around May. Even with plans to import more LNG, the shale-rich country may resort to industrial supply curtailments as it has in the past.

Only two companies participated in the auction launched on 20 February— local integrated company Pampa Energía, and Tecpetrol, a subsidiary of Argentina's Techint Group. Foreign companies that produce gas in Argentina, such as France's Total and Germany's Wintershall Dea, and even Argentina's state-controlled YPF, stayed on the sidelines.

The auction was a supplement to a program that was implemented last year to supply power generators in 2021-24.

The new auction attracted no offers for gas in May, when there was 9.51mn m3/d (335mn cf/d) available. For June, Tecpetrol offered 2.5mn m3/d and Pampa, 700,000m3/d out of 21mn m3/d available.

In July, Tecpetrol increased its supply offer to 3mn m3/d and Pampa, 900,000m3/d out of 26.05mn m3/d. In August, Tecpetrol offered 3.5mn m3/d and Pampa, 1mn m3/d out of 19.12mn m3/d, while in September Tecpetrol's offer dropped to 3mn m3/d and Pampa stayed flat at 1mn m3/d out of 9.21mn m3/d.

Tecpetrol offered its gas at an average of $4.745/mn Btu, while Pampa's price was $4.68/mn Btu.

For the winter months of 2022-24, Tecpetrol offered 2.5mn m3/d for each month and Pampa, 860,000m3/d, keeping prices steady.

"We are satisfied with this new contribution that the producing companies are making within the Plan Gas that allows us to more than double the supply of gas for the winter that we received in the first round," energy secretary Dario Martinez said.

As part of the initial auction, the government awarded 67.42mn m3/d at an average price of $3.5/mn Btu while it only awarded an additional 3.6mn m3/d for the winter months, a far cry from its requirements which peak in June at 29.65mn m3/d.

Argentina imports LNG through an existing terminal and is seeking a short-term lease of another regasification unit for the winter. Pipeline gas imports from Bolivia have been flagging because of lower production in the neighboring country. Argentina also imports some regasified LNG from Chile in the winter months.

The auction still has not been able to reverse the longstanding declines in output as gas production fell by 11pc on the year in January to 116mn m3/d. In 2020, Argentina's gas production fell by 8.6pc, on the year, to 123mn m3/d.

By Daniel Politi