Argentina introduces gas plan too late and forces purchase of LNG at record high prices

Buenos Aires, August 24 - Neftegaz.RU. Argentina’s Plan Gas IV, which aimed to incentivise gas production in the country, was introduced too late, according to GlobalData.

The data and analytics company notes that the plan’s delays have meant production has not ramped up enough to get the country through the winter, and it will be forced to rely on importing LNG at record-high prices.

Svetlana Doh, Upstream Oil & Gas Analyst at GlobalData, comments:

• Plan Gas IV’s delay is a shame, as it has introduced some positive changes
• For example, operators must commit to supply contracted volumes for a period of 4 years – with a possibility to extend the terms for another 4
• There is also now a maximum price for each basin, which should not exceed $3.21 per metric million british thermal unit (mmbtu) of gas, and the contract prices being in US dollars give more certainty for operators in the mid-term
• In fact, ever since the plan was initiated, drilling activities in the Neuquina basin, home to the Vaca Muerta shale, have picked up and production rose by almost 19% in the period of February-June 2021
• It is just all a bit too late to meet winter energy demand

Argentina’s energy supply demand is still way below its production capacity when it comes to natural gas.
Further, this production is forecast to decline at an average 3.4% in the next 5 years.