In a remote and dense desert in South America, a phenomenon that very few would have bet on a few years ago is taking shape: Argentina is becoming a true energy power. In just a few months, the country has gone from being a net importer of energy to being an exporter, a trend that is increasing and that does not seem to have an end in the short term. A fact that reveals this change has been confirmed in recent hours with the inauguration of the ‘gas pipeline reversal’ (they have turned it around metaphorically) that previously served to import gas from Bolivia and will now be used to export gas from Argentina to its northern regions and Brazil. It’s all due to Vaca Muerta’s oil and gas boom.
This Monday, Argentina inaugurated the reversal work on the Northern Gas Pipeline, which for almost two decades allowed imports of natural gas from Bolivia and will now make it possible to supply the north and center of Argentina and export to Brazil gas extracted from the colossal Vaca Muerta unconventional hydrocarbon formation.
The work, started last year and completed two months ahead of scheduleinvolved the expansion of the Northern Gas Pipeline by 62 kilometers, the reversal of the direction of gas injection in four existing compressor plantsand the construction of a 122-kilometer gas pipeline in the province of Córdoba (center).
Argentina stops buying gas from Bolivia
The project required an investment of 710 million dollarsof which 540 million were financed with a loan from CAF Development Bank of Latin America. Changing the direction of flow in pipes now allows gas to be brought from Vaca Muerta, in the southwest of Argentina, to the provinces of Córdoba, TucumánLa Rioja, Catamarca, Santiago del Estero, Salta and Jujuy, to supply the demand for thermal power generation plants, industries and homes. Furthermore, it will make it possible for Argentina exports natural gas to Brazilusing first the Northern Gasduct and then the network of pipelines that go from Bolivia to Brazilian territory.
After two decades of gas purchase contracts from Bolivia, Argentina stopped importing from that country last month, a step made possible by growing production volumes at Vaca Muerta, the world’s second largest reserve of unconventional gas and the fourth oil of this type.
The Ministry of Energy itself announced itand this way: Argentina will save foreign currency for 1,000 million dollars annually; The development of new industrial activities such as lithium mining will be promoted; and, in a second stage, national gas may be exported to other countries in the region.
“Argentina chose where to invest 700 million dollars so that it would revert to more wealth. With safe, non-intermittent gas, it will generate a well-being that until now we did not have. We are going to use our gas, at a third of the value that we used until now to import. We have come to celebrate a work of this magnitude, which the Milei government began and finished in record time,” says the Chief of Staff, Guillermo Francos.
For his part, the Minister of Economy highlighted: “From the Ministry of Economy we work together with private companies to unblock the first section of the work that was not awarded and the other two sections that had not even been put out to tender. We are going to recover the energy self-sufficiency that was destroyed by the previous management“But not only that, Argentina is also seeking its own revolution with oil. Crude oil and gas make a perfect tandem to achieve hundreds of millions of dollars in revenue that can help rebuild the country’s battered foreign exchange reserves and recover the economy.
Now it’s time for oil
In September, a team of 10, working in a corner of the vast Vaca Muerta shale formation in the western province of Neuquén, finished laying the giant 75-centimeter-thick carbon steel tubes and welding them together to build an oil pipeline. The objective is to transport crude oil almost 600 km to the Atlantic. Vaca Muerta is the fourth largest shale oil field in the world (the largest in South America) and the second gas. A pipeline extending south is planned to reach the city of Allen130 km away, at the end of this year. A second section, scheduled for completion in 2026, would transport crude oil another 440 km to Punta Colorada, on the southeast coast, according to the Financial Times.
“This is the country’s first major pipeline designed entirely for export,” says Manuel Castillo, who manages the project for Argentina’s state energy company YPF. “Over time, we will increase the transportation capacity of the basin by 70%”.
Vaca Muerta is close to fulfilling the promise that successive governments have been touting in the 14 years since its discovery, as new infrastructure eases transportation bottlenecks that have long hampered production.
Another project for a new pipeline, completed last year, allowed oil exports to Chile to restart after 17 years. Another, scheduled for completion in 2025, will increase flows to the coast of the province of Buenos Aires. The basin’s daily oil production has quadrupled in the last five years, from 90,000 barrels per day in 2019 to 400,000 barrels per day (bpd) in September 2024 and could exceed 1.1 million in 2030, according to the business chamber. CEPH hydrocarbon facility. That would allow exports of almost 700,000 bpd.
The most complex infrastructure to export much natural gas is still in place. However, in addition to the pipeline inaugurated to bring gas to Brazil, a new pipeline to Buenos Aires has helped double production since 2019, taking it to 70 cubic meters per day in 2024, which has crushed import needs. This year, Argentina, which has had an energy deficit since 2011, is expected to obtain $5 billion net from its exports.at a time when its foreign exchange reserves are dangerously low.
However, it is worth remembering that the economy is still subject to strict exchange and capital controls and the country must still resolve its macroeconomic challenges before be able to attract the investment necessary to become a significant exporterbusinessmen warn. Still, the election, almost a year ago, of President Javier Milei, who promised to lift those controls and deregulate the sector, has encouraged investors.
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