Argentina signs energy pact with Brazil and seeks resources for gas pipeline

Brazil and Argentina signed a memorandum of understanding on electricity and gas shipments until 2025 and are negotiating the possibility of the Brazilian government financing part of the construction of an essential gas pipeline for the colossal formation of unconventional hydrocarbons of Vaca Muerta, in southwest Argentina. “Energy integration is becoming a reality”, highlighted the Argentine president, Alberto Fernández, after the signing of the agreement, on Thursday (25).

The memorandum regulates the supply of electricity and gas between the two countries until 2025, but will be automatically renewed every four years. Argentina exported electricity to Brazil for around US$1 billion in 2021 and has shipped gas in various forms to Brazilian territory worth US$350 million so far this year. Brazil supplied electricity to Argentina worth US$ 250 million in 2022.

The new contract allows the use of the Bilateral Payment System in Local Currencies to settle energy purchases. The memorandum was signed by the executive secretary of the Ministry of Mines and Energy, Hailton Madureira de Almeida, by the secretary of Energy of Argentina, Flavia Royon, and by the Argentine ambassador to Brazil, Daniel Scioli.

As part of the signing of the memorandum, the Argentine government informed that it is negotiating with Brazil to obtain financing for the next stages of construction of the Presidente Néstor Kirchner gas pipeline. This gas pipeline, the first stage of which is already under construction and will be completed in the middle of next year, will be essential for evacuating gas from Vaca Muerta.

The formation, the second largest unconventional gas reserve in the world, requires greater transport capacity to move forward with its massive development. Argentina understands that the development of Vaca Muerta is essential to achieve its energy self-sufficiency and project itself as an international supplier, with Brazil as a potential market for gas from the gigantic formation through the extension of the new gas pipeline.