As gas production increases, Argentina aims to speed up key pipeline

A drilling rig is seen at the Vaca Muerta shale oil and gas drilling facility in the Patagonian province of Neuquen, Argentina January 21, 2019. REUTERS/Agustin Marcarian

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BUENOS AIRES, April 21 (Reuters) – Argentina’s natural gas production jumped 10% in March to a new monthly record, the energy minister said on Thursday, as the country’s growing shale production promises savings compared to more expensive liquefied natural gas (LNG imports).

The government is betting on a major new pipeline project to help move the growing supply.

The jump in production in March, compared to the same month last year, is particularly good news, as natural gas prices soared following Russia’s invasion of Ukraine on February 24. Even before Russia launched what it calls a “special military operation”, Argentina’s cash-strapped government was already struggling to finance expensive imports.

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Energy Minister Dario Martinez announced record production in March at an event in the massive Vaca Muerta shale formation in western Neuquen province alongside President Alberto Fernandez.

Martinez noted that the first phase of a new gas pipeline, designed to transport Vaca Muerta’s burgeoning production, will allow the government to better meet domestic demand by saving more than $3.4 billion on LNG imports to current prices.

Consulting firm Ecolatina estimates that Argentina’s energy deficit could reach $5 billion this year, up from around $1.6 billion last year, underscoring the country’s continued dependence on necessary imports to fuel Latin America’s third-largest economy.

Martinez added that next month the government will launch a tender for pipeline works, with contract awards announced in July and construction to begin in August.

The first phase of the Nestor Kirchner pipeline, named after a former president, will connect Neuquén to Buenos Aires and is expected to be completed by mid-2023.

President Fernandez stressed the urgency of the $3.47 billion two-phase pipeline project, including the main trunk and additional connections.

“Argentina needs it, because with every pipe that carries this gas, the sooner it reaches the center of Buenos Aires, the more opportunities it will give Argentina for growth,” the left-wing leader said.

“Not only so that Argentines can have warmth in winter, but so that the industry can continue to develop,” he added.

The first phase of the project will increase the maximum gas transmission capacity of the pipeline to 24 million cubic meters per day, while the second phase will reach up to 44 million cubic feet per day, bringing supplies from Vaca Muerta to the province of Santa Fe, in the northeast corner of the country.

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Reporting by Eliana Raszewski and Walter Bianchi; Written by David Alire Garcia and Stephen Coates

Our standards: The Thomson Reuters Trust Principles.

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