Works already established and in constant development such as the Néstor Kirchner Gas Pipeline, other new ones such as the Vaca Muerta Norte pipeline or the Offshore project in the Argerich area, in Mar del Plata, added to a future context that overcomes droughts, are plausible factors for a balance very positive (Reuters)
Different circumstances make experts assure sustained growth that, if some types of obstacles are removed, would make 2024 a great year in terms of exports of energy goods.
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Works already established and in constant development such as the Néstor Kirchner Gas Pipeline, other new ones such as the Vaca Muerta Norte pipeline or the Offshore project in the Argerich area, in Mar del Plata, added to a future context that overcomes droughts, are plausible factors for a balance very positive. However, certain conditions will also be required for this to be fulfilled in the best possible way.
Firstly, the inauguration of the Néstor Kirchner gas pipeline is already being a turning point in Vaca Muerta, although it still needs to be fully developed. Its first stage, with about 11 million cubic meters of gas per day transported 573 kilometers from Neuquén to the province of Buenos Aires, is only the beginning of its potential. The gas will reach the large metropolitan centers, where it supplies the electricity generating plants.
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Now the tender has been opened for the construction of the second section, which will cover 467 kilometers and will go from Saliqueló to San Jerónimo, in Santa Fe.
The tender was opened for the construction of the second section of the Néstor Kirchner Gasduct, which will cover 467 kilometers and will go from Saliqueló to San Jerónimo, in Santa Fe (Reuters)
Despite the delays in its construction, it is important that the next government strengthens it and takes advantage of its energy advantages. The most direct consequence will be the elimination of the import of natural gas through the Bahía Blanca terminal, which will be replaced by the new flow produced in Vaca Muerta. At the same time, a future export of gas is expected through that port, which will represent a large income of dollars to the country.
On the other hand, all the companies’ studies and forecasts are extremely positive regarding the Argerich Project. There is talk of nothing more and nothing less than a possible new Vaca Muerta, 311 km off the coast of the city of Mar del Plata.
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The data is still preliminary and will only be known with certainty between October and December, after the first exploratory well and the seismic. If the existence of an offshore is ratified, great movement can be expected in the area for 2026 and 2027, with record production of barrels per day for an estimated period of between 4 and 6 years.
This project would produce the equivalent of YPF’s current total production (and 35% of what is produced in 2022) and will have an impact on employment, potentially generating added value and new jobs within metalworking, logistics transportation and steel industry.
The Argerich Project would produce the equivalent of YPF’s current total production (and 35% of what is produced in 2022) and will have an impact on employment
Due to all the great advantages of offshore, the National Government, more precisely the Ministry of the Environment, is urged to resolve the pending documentation with the companies so that this mega energy development can actually take place.
Another important factor to take into account for 2024 has to do with the launch of the Vaca Muerta Norte pipeline. This will connect La Amarga Chica with the head of the Trasandino Oil Pipeline (Otasa). Its 24-inch diameter will allow a transportation capacity equivalent to hundreds of thousands of barrels, which will pass through some 16 concessioned hydrocarbon areas.
The recovery of the trans-Andean pipeline with which it will be connected was carried out by YPF together with the shareholder partners of Enap and Chevrón, who made its reactivation possible after 17 years of inaction. The work was reopened last May and is already generating an increase in crude oil exports.
The start-up of the Vaca Muerta Norte oil pipeline is scheduled for 2024. This will connect La Amarga Chica with the head of the Trasandino Oil Pipeline (Otasa) (Reuters)
However, the figure is expected to increase drastically with the start-up of Vaca Muerta Norte. Even YPF already anticipates a possible surplus to begin exporting to markets with greater demand, such as the West Coast of the United States (which already functions as a destination for what is extracted in Vaca Muerta) or countries in Southeast Asia.
Different specialists assure that in 2024 there will be a recovery in many sectors after overcoming the drought. At the same time, there is the development of the production of one of the most sustainable lithiums -made from brine-, whose process is longer than other types – such as the one made from stone, in Australia-, but whose competitiveness is going to be much greater in the long term.
In itself, by replacing gas imports with the hydrocarbon extracted from Vaca Muerta, significant savings of approximately USD 4.2 billion would be achieved. And according to World Bank estimates, Argentina would grow 2.3% next year, while the IMF predicts an improvement of 2 percent.
However, for all this to be achieved, it is necessary for the government that takes office in December to carry out different measures:
1) Eliminate or narrow the exchange gap;
2) Try to significantly reduce inflation;
3) Greater building infrastructure and inputs are required to increase the production of Vaca Muerta Norte;
4) Logistics did not explode in the way that production did. A well-oiled mechanism is required to combat the inertia involved in activating a well; and
5) Join the energy transition, warning that there is a window in the world of no more than 30 years of use of fossil resources. If they are not extracted as soon as possible, they are goods whose wealth the country will end up losing, since over time they will stop being consumed.
In this way, investment in the infrastructure of these works becomes a very high priority. This opportunity should not be missed.
The author is General Secretary of the Oil, Gas and Biofuels Union of Bahía Blanca