ARGENTINA'S LNG UP

U.S. IEA - On June 6, 2019, Argentina shipped its first export cargo of liquefied natural gas (LNG), which was produced on a floating LNG production barge. The barge, Tango FLNG, is located at the Bahia Blanca port, has an LNG production capacity of 500,000 metric tons (0.07 billion cubic feet per day (Bcf/d)) and is expected to produce up to eight LNG export cargoes per year. The vessel carrying LNG cargo—Fuji LNG—loaded 30,000 cubic meters (0.7 billion cubic feet) of LNG, or 20% of its capacity, according to SP Global Platts. Fuji LNG may load additional LNG at another export facility before traveling to its final destination.

Natural gas demand seasonality and growth in shale production have supported the development of LNG exports in Argentina. Argentina's natural gas consumption peaks during the austral winter (May to September) and remains relatively low during the rest of the year. Argentina's off-peak season coincides with the winter peak demand season in major LNG consuming countries. Domestic natural gas production exceeds consumption during off-peak season, but is insufficient to meet demand during the winter peak season, which requires Argentina to import natural gas by both pipeline and as LNG. Argentina currently does not have large-scale natural gas storage facilities, and natural gas producers have had to shut-in surplus production to accommodate the shifting seasonal consumption patterns. Argentina is currently conducting feasibility studies to identify potential natural gas storage sites.

Tango FLNG is supplied by natural gas produced in the Vaca Muerta shale formation. The natural gas is transported via an existing pipeline network to the port of Bahía Blanca and then liquefied aboard the vessel. These pipelines were previously used to transport imported LNG from the Floating Storage and Regasification vessel (FSRU) moored at Bahía Blanca port.

During the last three years, Argentina has seen growing shale gas production, which has more than tripled between January and December 2018, from 0.3 Bcf/d to 1.0 Bcf/d. This growth has partially offset steady declines in natural gas production from mature fields, which decreased by more than one-third between 2009 and 2018. In addition to producing natural gas from shale formations, Argentina also produces tight gas. Production of tight gas started earlier than shale gas production and reversed the declining natural gas production trend in Argentina in 2014–2017. However, tight gas production has remained at the same level (around 1 Bcf/d) since 2016.

Recent growth in shale gas production was stimulated in large part by the economic incentives the Argentinian government offered for producing natural gas from tight and shale formations. Those incentives guaranteed producers minimum prices of $7.50 per million British thermal units (MMBtu) in 2018, decreasing by $0.50/MMBtu annually until 2021. In 2017, the Argentinian government also suspended import tariffs on used imported equipment, such as drilling rigs, further reducing shale production costs. Although government subsidy programs supporting shale and tight gas production were suspended in January 2019, shale production has remained stable as of April 2019.

-----

Earlier:

2019, March, 15, 10:05:00 ARGENTINA'S GAS INVESTMENT Argentina’s efforts to boost its natural gas output and supply are progressing through new pipeline and transport projects and auctions, moves that are expected to balance the country’s production and demand, the energy secretary said English

2019, March, 15, 10:00:00 ARGENTINA'S OIL, GAS INVESTMENT The Argentine government’s plan to develop the massive Vaca Muerta oil and gas reserves in northern Patagonia has hit a major obstacle. English

2018, December, 5, 09:20:00 VACA MUERTA INVESTMENT $2.3 BLN PLATTS - Argentina's state-run energy company YPF and Malaysia's Petronas agreed Tuesday to invest $2.3 billion in a shale oil project in Vaca Muerta, with a target of reaching 60,000 b/d of oil equivalent by 2022. English