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Argentina may have first LNG plant ready in 4 years if reforms pass -Tecpetrol

Published 20/03/2024, 02:03 am
© Reuters
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By Marianna Parraga

HOUSTON (Reuters) -Argentina could inaugurate its first liquefied natural gas (LNG) project in four years if economic and energy reforms proposed by President Javier Milei are passed by congress soon, the CEO of producer Tecpetrol said on Tuesday.

The South American country is going through a difficult economic situation but the reforms would make it more attractive for energy investment and remove fiscal imbalances, said Tecpetrol CEO Ricardo Markous at the CERAWeek by S&P conference in Houston.

Argentina's Senate last week rejected Milei's wide-ranging economic reforms decree, a blow to the libertarian leader's austerity agenda. That plan included removing energy subsidies to help address a balance of payments deficit mainly caused by energy imports, including gas from Bolivia and LNG cargoes.

If Milei's reforms are approved, Argentina could see a surplus in its energy trade balance this year, Markous said.

Argentina has already trimmed LNG import plans in a step towards reducing the deficit. Building the infrastructure needed to export Argentina's natural gas as LNG should be the long-term solution, said the CEO of Tecpetrol, which controls about 15% of the country's shale gas output.

Argentina's Vaca Muerta, a formation that rivals the U.S. Permian Basin, holds the world's second-largest shale gas reserves and could become a key global supplier of gas if it speeds up projects planned for exporting LNG.

At least two large projects to produce and export LNG in Argentina are under discussion: one involving Malaysia's Petronas to build floating LNG plants, and another by Tecpetrol that could include modular onshore facilities.

"The politicians (in Argentina) are realizing that the best way to monetize the gas reserves is through LNG," Markous said.

As the country resolves gas transportation bottlenecks and output increases, imports from Bolivia may no longer be necessary from October, Markous said. Bolivia has not fully paid producers there for gas previously supplied to Argentina, he said.

DRAFTING PROJECTS

Energy executives have said Milei's reforms, which Markous said he expects to pass this year, are needed to secure fair export prices and higher investment returns. They said a special bill for mega projects included in the package would establish the fiscal conditions for LNG developments, and for privately-financed energy projects.

Tecpetrol could advance natural gas liquids and gas pipeline projects if the bill is approved, Markous said.

Markous said some shale gas plays in Argentina are faster and cheaper to produce than some U.S. regions, but a further reduction in production costs is needed.

Oil output could reach 1.5 million barrels per day (bpd) in coming years from about 700,000 bpd last year, Markous added.

A gap between domestic fuel prices and international prices has narrowed this year, but needs to be removed to encourage competition, he said.

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