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Argentina may build LNG liquefaction terminal in far southern: source

Argentina is considering the construction of its first liquefaction terminal to increase natural gas deliveries from the southernmost Austral Basin domestically and eventually to overseas markets, a person close to the project said Friday.

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Carlos Roma, a congressman for the ruling conservative party, submitted a bill for the project to Congress on Thursday, said the source, who works for the congressman.

The bill calls for building the terminal in Tierra del Fuego, an archipelago thought to have huge potential for increasing offshore gas production. The gas supplies would be liquefied for delivery by tanker to two floating regasification terminals in the province of Buenos Aires.

"At first, the gas liquefaction plant would replace imports," the source said. "In the future there would be the possibility of exporting supplies."

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Argentina imports an average of 25 million cu m/d of LNG to terminals in Bahia Blanca and Escobar, mostly from Nigeria, Qatar and Trinidad and Tobago.

These imports have increased since the first deliveries came in by tanker in 2008, as the combination of domestic dwindling gas production and surging consumption led to shortages. Since then, however, huge unconventional resources have been found in southwestern plays like Vaca Muerta, and more recently the promise for increasing production has been gaining attention off the coast of Tierra del Fuego.

"The Austral Basin is one of the biggest reserves of gas in the country, and it is not being 100% exploited," the source said.

The Austral Basin's production shot up 16% to 30.2 million cu m/d in July from 26 million cu m/d a year earlier, or about a quarter of the 123 million cu m/d national output, according to the Argentine Oil and Gas Institute, an industry group.

The biggest producer there is France's Total, which this year put into production the offshore Vega Pleyade gas field, helping to boost its output from the region to 22 million cu m/d.

The federal government wants to boost output from the basin. Last month, Energy Minister Juan Jose Aranguren announced plans to hold tenders for offshore acreage starting in 2017, the first of which will be for licenses there.


However, to ramp up production from the basin, more capacity is needed to move the product to market.

The main pipeline running 4,679 km (2,907 miles) north to the large consumer markets in Buenos Aires from Tierra del Fuego is operating at full capacity.

"The pipeline is full," the source said. "No more gas can pass through it." With the liquefaction terminal, gas producers will be able to bypass this bottleneck, he added.

The bill, which still needs to be approved by Argentina's Senate and lower house, would set up the framework for the project, whether it is to be built by the state, private investors or a public-private partnership, the source said.

Argentina's new conservative president, Mauricio Macri, has said he wants to replace LNG imports with local production by 2021-22.

--Charles Newbery,
--Edited by Richard Rubin,