Register with us today

and in less than 60 seconds continue your access to: Latest news headlines Analytical topics and features Commodities videos, podcast & blogs Sample market prices & data Special reports Subscriber notes & daily commodity email alerts

Already have an account?

Log in to register

Forgot Password

Enter your Email ID below and we will send you an email with your password.

  • Email Address* Please enter email address.

If you are a premium subscriber, we are unable to send you your password for security reasons. Please contact the Client Services team.

If you are a Platts Market Center subscriber (, Please navigate to Platts Market Center to reset your password.

In this list
Natural Gas

Argentina could become player in global gas market: analysts


Japanese demand losses pose quandary for LNG

Natural Gas | Oil

Platts Wellscape P2P

Commodities | Electric Power | Metals

Battery Metals Conference, Inaugural

Natural Gas

NYMEX September natural gas futures mostly flat as output hits all-time high over weekend

Argentina could become player in global gas market: analysts

Argentina could become a player in the global natural gas market bydeveloping its giant Vaca Muerta shale play, but a number of challenges mustbe taken on including finding new outlets for the rising production, analystssaid Tuesday.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

"Argentina has huge potential in gas," Daniel Montamat, an advisor to theArgentinian Energy Ministry, said at the Latin American Energy Organization'sForum on Regional Energy Integration in Buenos Aires.

The country has proved oil and gas reserves of 4 billion barrels of oilequivalent and probable reserves of 9 billion boe, whereas the shale oil andgas resources total 170 billion boe, of which nearly 80% is gas, Montamatsaid.

The size and quality of the resources have attracted companies like BP,Chevron, Dow Chemical, Total and others that, along with Argentina's stateYPF, are starting to develop resources in Vaca Muerta. The play has gainedcomparisons to the Permian Basin in the US.

Shale oil and gas production rose 26% to 75,700 boe/d in August inNeuquen, home to most of the play, according to the latest data of thatprovince's Department of Energy, Mining and Hydrocarbons.

The projects are expected to increase the Argentina's total gas output to142 million cu m/d in 2023 and 185 million cu m/d in 2025, according to energyministry forecasts. That would be up from 122 million cu m/d this year, itsdata show.


The big challenge going forward is to find outlets to underpin a massdevelopment of the resources.

"Argentina must decide if it wants to play in the South American Cup orthe World Cup," Montamat added in reference to the popular soccer tournaments."We have to decide if we want to develop the resources for the domestic marketor the regional market, or if we are going to become a player in the world gasmarket."

If the aim is to reach national gas production 140-150 million cu m/d,then supplies must be exported in South America, Montamat said.

If the country wants to ramp up production to 190 million-200 million cum/d or even 250 million cu m/d, it would have to sell gas by boat on theglobal market, he said.

Montamat recommended targeting the global market.

"We have to think big," he said.


How to get to the higher production levels, however, is a major questionfacing the industry.

Argentina is starting to pull out of a production decline that left itwith a 25% gas deficit, but the conditions for doing business in the countryare not yet stable enough for a rapid deployment of capital. Inflation isrunning at 23%, according to government data, and labor costs remain high,largely because of strong unions.

Roberto Ferreira da Cunha, a director of research firm IHS Markit, saidforeign capital is coming in slowly because of the high cost of doing businessin Argentina. This means that the country will continue to have to import gas,probably for the next 10 years.

Another challenge for expanding production is to build pipelines tohandle the growth, and to find storage capacity to handle the volatility inlocal demand.

Argentina's gas consumption surges in the winter for heating and plungesin the summer, meaning that without storage capacity companies would have toshut down wells for eight months of the year, a deterrent to investing in VacaMuerta.


A third challenge is to bring down the cost of developing Vaca Muerta soit is more competitive against imported supplies.

"If it is cheaper than LNG, shale in Argentina could absorb demandotherwise met by LNG," Ferreira da Cunha said.

Mauro Chavez, a senior research analyst at Wood Mackenzie, said thetarget should be to produce Vaca Muerta gas at $3/MMBtu. That would be downfrom the average price of between $4/MMBtu and $5/MMBtu this year.

Progress is being made to boost well productivity, he said.

In blocks like Dow Chemical and YPF's El Orejano and Tecpetrol's FortinPiedra, the horizontal wells drilled over the past few months "haveproductivity in line with the best plays in the United States," Chavez said.

If the cost of frac sand and logistics can be brought down, then thebreakeven price for production will get closer to $3/MMBtu, he said.

In terms of selling the increasing output, Chavez said short-termsolutions include reducing imports from Bolivia -- a supplier of about 20million cu m/d -- in the summer, freeing up more of the market for Vaca Muertagas. The other would be to export more gas to Chile, he said. Chile importedas much as 20 million cu m/d as recently as 2004, but has since installed tworegasification terminals, limiting the potential sales from Argentina in thefuture, Chavez said.

Even so, he said finding more outlets for Argentina's gas could determinethe future production of Vaca Muerta.

"If the companies see that the production is not going to have a market,this could stall investment," Chavez said.

--Charles Newbery,

--Edited by Richard Rubin,