Natural gas production in Argentina rose for a second straight month in July as the country’s Plan Gas 4 tender scheme started to show results.

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“Thanks to Plan Gas 4, we are achieving great production results,” Energy Secretary Dario Martínez said. “We’re breaking production records and this allows us to continue growing the sector and guaranteeing internal supply.”

Argentina had a disastrous 2020 in terms of gas production and a slow start to production this year, causing the country to import more liquefied natural gas (LNG) than last year to meet winter demand. 

The turnaround started in June, when natural gas output in Argentina was 127 million cubic meters/day (MMcm/d), up slightly from last June. In July, gas production was up 2.8% on a year earlier, to 130 MMcm/d. Unconventional production, including shale and tight gas production, rose by 17.3% to 64.9 MMcm/d in July, according to the Energy Secretariat.

In a recent earnings call, executives at Argentina’s national oil company YPF SA highlighted growth in shale gas from the prolific Vaca Muerta formation. Natural gas production expanded 7.3% quarter/quarter in 2Q2021 thanks to a 34.6% rise in shale gas, and “in spite of the 20-day blockade carried out by health care workers in the Province of Neuquén that severely affected our operations,” executives said.

Neuquén is home to the majority of the Vaca Muerta formation. YPF shale gas production rose to 8.6 MMcm/d in the second quarter, up 9.4% year/year.

Meanwhile, Brazil President Jair Bolsonaro said in a mid-August address to the nation that a plan to build a pipeline to bring in gas from Argentina was being considered. Brazil is in the midst of a historic drought and is importing record levels of LNG to meet power generation demand.

Bolsonaro said hydroelectric dam reservoirs are “at the limit of the limit.”

The pipeline’s cost has previously been pegged at $5 billion. Experts have said exports via both pipeline and LNG are the key to unlocking Vaca Muerta’s potential. Argentina’s ambassador to Brazil, Daniel Scioli, last year said the 900-mile pipeline would run from western Argentina to the southern Brazilian city of Porto Alegre.