Argentina has secured financing for the second leg of the Nestór Kirchner natural gas pipeline system, energy secretary Flavia Royon said last week during a conference in Buenos Aires.

Flavia Royon

She said the state had obtained financing for $689 million from the Brazilian National Development Bank and another $540 million from Latin American development bank Corporacion Andina de Fomento, or CAF.

Royon added that the first phase would increase Vaca Muerta takeaway capacity by 30%.

Government officials think the pipeline’s $1.5 billion first phase, which is set to have a capacity of 24 million cubic meters/day (MMm3/d), or about 847 MMcf/d, should be online by June. It will stretch from the town of Tratayén in Neuquén province to Salliqueló in Buenos Aires province, passing through Río Negro and La Pampa provinces along the way. 

The second phase of the project would include upgrades to the Gasoducto Norte pipeline system, including flow reversal works and compression stations in the north of the country. Once complete, it would enable Argentina to reduce or stop imports from Bolivia.

Royon highlighted growing oil and gas production out of the Vaca Muerta shale deposit. “In August of this year, unconventional gas production was the highest in our history, representing 56% of the total,” she said.

According to Argentina’s Economy Ministry, natural gas production in the third quarter rose 5.2% year/year to 139.2 MMm3/d, or about 4.9 Bcf/d.

For state oil firm YPF SA, unconventional oil production rose 50% year/year in the third quarter, while unconventional natural gas output was up 20%. 

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The growth was driven by operational improvements in Vaca Muerta, where the company achieved new records for hydraulic fracturing and drilling speeds during the quarter. Shale oil and gas represented 41% of total production during the period, up from 33.4% a year earlier.

Royon said that spurred by Vaca Muerta, oil and gas jobs have risen for 13 months straight and now number about 100,000.  

“There is no sustainable energy policy with a long-term vision possible, without the necessary strategic association of the public and private sectors,” she said. She added that, “If the last century was that of oil, this century gives us the challenge of caring for the environment and the transition towards energies with lower carbon emissions.”

She also said that the development of natural gas production and infrastructure could lead to LNG exports, reversing the country’s energy balance. 

State firm YPF and Malaysian national oil company Petronas signed a memorandum of understanding on Sept. 1 to study the potential for an integrated liquefied natural gas export project. An investment decision is expected next year.

If the project moves forward, it would probably require another pipeline, YPF executives have said.

Royon estimated that the set of investments planned in the energy sector would allow Argentina to go from a negative energy trade balance “to a positive balance of between $4 billion and $8 billion dollars in 2026.”

The energy secretary also highlighted offshore oil and gas development, in particular, the Argerich project off the coast of the city of Mar del Plata. “It could mean another Vaca Muerta for our country,” she said.