Enarsa accelerates LNG imports and closely follows Vaca Muerta / Argentina News

Due to delays in the Néstor Kirchner gas pipeline, the state firm called for an international tender to ensure the supply. How does it affect prices?

For antonio rossi

01/25/2023 – 4:12 p.m.

In the midst of some indications and versions that warn that the government of Alberto Fernández would not be arriving on time to inaugurate on June 20 the so many times promised and announced trunk gas pipeline of Vaca Muerta “President Néstor Kirchner; the state company Enarsa decided to ensure the supply of imported LNG by ships with a call for international bids to buy 30 shipments for the Escobar regasification plant.

Enarsa’s move – a company led by the camper from Santa Cruz, Agustín Gerez – aims to take advantage of the seasonal drop in LNG prices in the global market in order to “save” between US$1,600 and US$1,800 million in the payment of imports of this fuel that had been initially calculated for this year at around US$3,000 million.

Unlike previous tenders, the rules of the game of the new call launched by Enarsa to oil companies and energy traders contain three salient points:

• The 30 shipments – whose offers must be presented on February 8 – have a delivery schedule that goes from March 15 to August 5.
• The tender was assembled in three blocks of 10 LNG loads each. Although the official intention is to have three different suppliers, the specifications left the door open so that, when faced with a more convenient offer, a single company is left with all the shipments.
• Regarding the method of payment, the traditional scheme for canceling the cargo of each ship 72 hours before entering the regasification terminal was modified. The new mechanism establishes a payment of 20% five days after the award of the purchase contract and the accreditation of 80% in four monthly disbursements between March and June.

Due to the delays in the Néstor Kirchner gas pipeline, Enarsa called for an international tender to ensure supplies.

Enarsa and the Government, between port demand and volatile prices

In the public hearing held at the beginning of December, where the update that the price of natural gas intended to meet residential and priority demand and the level of subsidy that the State will continue to cover will be discussed this year; The Ministry of Energy calculated that during 2023, “The priority demand for natural gas will reach 15,223 million cubic meters (MMm3), distributed in 5,754 MMm3 between the months of January to April and from October to December, and 9,469 MMm3 in the winter period from May to September.”

According to the projection put forward by the energy area piloted by the massista from Salta, Flavia Royón, the supply of that demand will be covered in the following way: local producers will supply 13,488 MMm3 (88.6% of the total); 1,433 MMm3 (9.4%) will arrive from Bolivian deposits and 301 MMm3 will be imported by methane tankers (2%).

Broken down by the origin of the fuel, the official report had projected for this year an average price of local gas of US$3.90 dollars per million BTU (US$/MMBTU); of 9.91 u$s/MMBTU for shipments that will arrive from Bolivia and an average value of 42.07 u$s/MMBTU for LNG, to which must be added a fixed and variable cost of regasification that oscillates between 1 and $1.3/MMBTU.

During 2022, Enarsa had to pay for imported LNG a price that oscillated between US$30 and US$35/MMBTU.

The rise that was expected for this year and that Energía had estimated to be above US$42 did not occur in practice due to a greater global supply and the energy conversion and saving measures adopted by most of the European countries and asians.

In recent weeks, the price of LNG to deliver between April and August was positioned between US$20 and US$23/MMBTU. Given this situation, Enarsa’s intention is to close the contracting of the LNG shipments needed to cover the higher consumption in the months of low temperatures as soon as possible. that cannot be met with local gas production.

The Secretary of Energy seeks to take advantage of low energy prices globally, so as not to depend on the gas pipeline.

Enarsa, with an eye on the Vaca Muerta gas pipeline

According to the first calculations considered by the Enarsa technicians, if the bidders’ proposals are framed within the current price levels, LNG imports could fall below almost US$3 billion that had been initially planned for a total amount that would oscillate between US$1,200 and US$1,400 million.

However, that estimated “savings” due to the drop in international prices could be diluted if the GPNK is not completed and enabled within the agreed term.

Starting in the middle of the year, the new gas pipeline would allow the injection of some 11 million cubic meters of gas per day from the Vaca Muerta wells into the local market. In the event of a delay, that volume of gas will have to be covered with more LNG imports.

The date of June 20 set by the Government for the cutting of ribbons and opening of the valves for the gas pipeline that will link the Neuquén basin with Saliquelló It could not be fulfilled if the warnings and doubts raised by different specialists and followers of the works carried out by the companies Techint, Sacde and BTU are confirmed.

The pessimistic signals are focused on a series of setbacks and operational difficulties that would be occurring in the delivery times of the pipes and the rate of progress of the welding and assembly works of the gas pipeline.

Although the Government maintains the official account that the GPNK will enter into service on the scheduled date, in case of doubt, the Enarsa offices have the papers ready to go out and contract more LNG shipments and the return of the regasification ship that operated in Bahía Blanca until last year.