The giant gas reserve that could have alleviated the current crisis


Argentina, home to the world‘s second largest shale gas field, cannot help gas-starved Europe, which is scrambling to obtain non-Russian natural gas after Russia invaded Ukraine. Russia. In fact, Argentina can’t even help weaning itself off its dependence on short-term energy imports despite the huge resources of the Vaca Muerte shale. The development of Vaca Muerta has encountered various hitches over the past half-decade, from perennial economic crises to global oil and gas crises and national currency limitations. Additionally, Argentina has failed to advance pipeline projects to bring Vaca Muerta gas to its neighbors first and then to the global LNG market.

Thus, the country which holds one of the largest deposits of shale gas in the world cannot currently do anything to alleviate the global natural gas crisis in a market in need of gas, in which Europe outbids Asia. for LNG supply. Europe tries to reduce reliance on Russian gas pipeline as Gazprom threatens to cut off supply to more customers who refuse to pay in rubles.

Despite its potential as a producer, Argentina imports natural gas and spent billions of US dollars last year on LNG imports. It also lacks pipeline infrastructure and LNG terminals to export its gas, more than a third of which comes from Vaca Muerta shale.

Despite the plans of all the presidential administrations for the last half-decade, the authorities have just opened the tender for a major new gas pipeline, named Néstor Kirchner after the former president, to connect the field of shale gas from Vaca Muerta to a port city north of Buenos. Areas.

“The incompetence of our officials means that the aptly named Néstor Kirchner pipeline that could have saved the country some US$7 billion in natural gas imports this year will not be completed until 2024,” Agustino Fontevecchia, digital director for Editorial Profile, wrote earlier this year.

For years, Argentina has been betting big on increasing oil and gas production in its largest shale play, Vaca Muerta, in Neuquén province. Vaca Muerta—Spanish for ‘dead cow’—was nicknamed the Argentinian Permianalthough its geological properties have been compared more adequately to the Eagle Ford.

The Vaca Muerta shale zone is estimated hold recoverable resources consisting of 16 billion barrels of oil and 308 trillion cubic feet of natural gas. These figures make Vaca Muerta the second largest shale gas deposit in the world.

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In recent years, however, Argentina has missed the opportunity to capitalize on the enormous gas resources by not advancing the infrastructure to bring these resources to its centers of domestic demand and to the global market. If Argentina had made these advances, it could have contributed to the current energy crisis, and it could have helped itself with gas export revenues, given that Europe is more or less ready to pay any price for an additional supply of LNG that would replace the Russian gas pipeline.

In recent weeks, Argentine authorities have made progress in initiating efforts to spur Vaca Muerta development and pipeline construction to make Argentina self-sufficient in gas supply and LNG exporter.

Last week, Argentina announcement it would allow easier access to foreign currency for energy companies in order to stimulate the development of Vaca.

“Argentina has the energy the world needs. In order to take advantage of this, we have defined clear rules in favor of investment and employment,” said Argentinian President Alberto Fernandez, announcing the decision.

Argentina has had capital controls in place since 2019 to protect its foreign exchange reserves. With easier access to US dollars, energy companies will be able to import specialized equipment for development, especially for hydraulic fracturing.

Last week, Economy Minister Martin Guzman discussed with the governor of the province of Rio Negro, Arabela Carreras, the potential for a liquefaction plant and an LNG export facility in the region.

Argentina’s state-owned energy company YPF is examining four sites in the provinces of Buenos Aires and Rio Negro for a major LNG project that would cost $11.5 billion and could make the company a net exporter of energy, YPF president Pablo Gonzalez told the national news agency. telam in an interview this week.

Argentina is currently producing more gas than it can transport and its existing pipelines are collapsing, the YPF leader said.

By Tsvetana Paraskova for Oilprice.com

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