Argentina Looks To Boost Gas Output

Argentina aims to build new natural gas pipelines and to attract more investment in oil and gas production in the Vaca Muerta shale play in order to increase production and secure transportation and sales for its gas, Energy Minister Gustavo Lopetegui said in Houston.  

Domestic gas consumption in Argentina is highly seasonal, with peak demand in the Argentinian winter and significantly lower consumption during the summer months in the southern hemisphere.

This seasonality in natural gas demand compares with constantly rising gas production from Argentina’s Vaca Muerta shale play – dubbed the ‘Argentinian Permian’, although its geologic properties have been compared to the Eagle Ford - which is one of the few bright spots in shale gas production outside the United States. 

Vaca Muerta will need investments of between US$5 billion and US$10 billion annually to boost production, Reuters quoted Lopetegui as saying in Houston. Current annual investments in Vaca Muerta are around US$4.3 billion.

Argentina also aims to award by the end of September construction contracts for natural gas pipelines from Vaca Muerta to the capital Buenos Aires, the minister said, noting that these construction contracts would be valued at up to US$1.8 billion.

“Vaca Muerta must grow harmonically so it is possible to produce, transport and sell without problems,” Lopetegui said, as carried by Reuters.

While Vaca Muerta holds large shale reserves, it has high production costs which have so far hampered a U.S.-style shale revolution in Argentina.

According to Lopetegui, some producers in Vaca Muerta have recently managed to reduce production costs significantly.

At a meeting with major energy companies in Houston on Monday, Lopetegui presented investment opportunities worth US$30 billion in the energy sector, including US$10 billion in oil and gas, US$8.2 billion in infrastructure, US$12 billion in electricity and renewables, and US$3 billion in access to new markets, the Argentine government said on its website.

By Tsvetana Paraskova for Oilprice.com

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