Argentina reaches agreement with Bolivia for gas supply

Argentina reached an agreement with Bolivia for the supply of natural gas. The country will deliver on a firm basis, as in last winter, some 14 million cubic meters per day (MMm3/d) at that time of year, with the possibility of sending some additional “significant” volumes, according to the Ministry of Economy. The weighted average price would be $11.61 per million BTUs, substantially below other alternatives but also more expensive than the $6 paid last year and the $7.50 expected in early 2022.

In total, Bolivia could supply some 16 to 18 MMm3/d (the difference will be “interruptible”), which will serve to replace some imports of Liquefied Natural Gas (LNG), diesel and fuel oil, which are more expensive than their network alternative.

In any case, the Government will need to buy at least between 30 and 35 LNG ships and liquid fuels for the operation of the power plants. The original energy planning estimated 69 liquefied gas vessels for this year.

The prices will be: 8 to 9 dollars per million BTU for the base volume of 10 MMm3/d, 10 dollars per million extra BTU for the remaining 4 MMm3/d, for a total of 18 dollars. On top of that, a triangulation with Brazil would allow for additional volumes. In any case, it will continue to be more convenient than paying 25 dollars per million BTU for diesel, which is scarce in the interior and has a dual purpose (use in vehicles and thermoelectric plants) or 40 dollars per million BTU for liquefied gas.

According to private sources in the sector, the three-way gas diplomacy (with Chile, Bolivia and Brazil) makes it possible to reach almost enough physical supply, although in parallel the Government is working with the CGT and the Argentine Industrial Union (UIA) to plan energy consumption to avoid supply problems during the coldest days.

The rains in Brazil would also help to recover the level of the Yacyretá and Salto Grande hydroelectric dams, which produce cheap energy at a rate of 20 dollars per megawatt-hour (MWh), compared to 60 dollars for a very efficient thermal plant.

The other part would be completed this Friday, with the arrival of the Minister of Economy, Martín Guzmán, in Brazil. There, an attempt will be made to announce that Jair Bolsonaro will use the water from his reservoirs to generate hydroelectric power and free Bolivia from its supply priority, so that the gas can be sent to Argentina.

Previously, on Monday progress was made in the dialogue with the president of Chile, Gabriel Boric, and the Argentine oil companies, for an exchange of gas and offset compensation to facilitate energy logistics.

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