- Crude can propel energy trade to $8 billion in nation’s favor
- Shipments to Chile to begin in May, says energy chief Royon
According to Bloomberg article published on March 7, 2023, booming oil production out of shale patch Vaca Muerta will create surpluses in energy trade for Argentina to the tune of $8 billion within a few years, Energy Undersecretary Flavia Royon said in an interview.
Drilling is picking up fast in Vaca Muerta after a series of false dawns over the past decade with top developer, state-run YPF SA, poised to ramp up investments.
Pipeline expansions, a major bottleneck to production, are finally under construction. A duct to Chile that’s been abandoned for years will start to ship crude in May, Royon said. YPF is also leading plans for a new cross-country conduit to the Atlantic coast, where a new port would also be built. That’s in addition to current work to double similar existing facilities.
Argentina's Oil Boom
Argentina’s chronic shortage of US dollars is a key source of imbalances in its crisis-prone economy, and over the years has led to unorthodox policies including capital controls and debt restructurings. Trade surpluses are key to improving the situation.
“In three or four years we’ll have a positive energy trade balance of $8 billion driven by crude exports,” Royon said at a conference in Toronto.
The government is expecting energy trade to be balanced this year after a long time in the red — including a $5 billion deficit in 2022 — as fuel imports hampered a nation that was once comfortably a net exporter.
Other highlights from the Royon interview:
- Argentina is in talks with lenders to finance an expansion of its natural gas and power transportation networks
- The government is negotiating with different funds for the $3 billion it still needs to build the second stage of the Nestor Kirchner duct, which would take Argentina’s Vaca Muerta shale gas toward Brazil
- It’s also looking for international financing to expand the country’s high-tension power lines
- Without expansion, Argentina can’t bring any more big renewable energy farms online
FUEL PRICES:
- Government plans to sit down with the oil industry to agree on gasoline and diesel price rises with the current deal expiring this month
- An agreement over three or four months is best, Royon said, since it would anchor CPI expectations
FX LOOPHOLE:
- A decree giving drillers greater access to hard currency amid FX controls will be enforced in the coming days after several companies put in requests to make use of it
POWER:
- A “scouting” of candidates interested in buying electricity distributor Edesur from Italy’s Enel should start this month
- The chief government theory behind a fire that caused a nationwide blackout last week is still sabotage, especially since President Alberto Fernandez was delivering a major speech that day
