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Argentina's LNG import terminal in Escobar to reopen, easing shortage concerns

Energy Transition

Platts Global Integrated Energy Model

Argentina's LNG import terminal in Escobar to reopen, easing shortage concerns

Destaques

Judge lifts three-month closure

Imports expected to meet winter demand

Economic recovery likely to boost demand this year

Buenos Aires — A federal judge in Argentina has lifted a more than three-month suspension of the country's only floating storage and regasification unit (FSRU) after the government warned of natural gas shortages if LNG imports were hindered.

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The FSRU, which is docked in Escobar, a district up the Parana river from Buenos Aires, was ordered closed last October on explosion concerns. In an 11-page ruling, Judge Adrian Gonzalez Charvay said studies presented by the national Energy Secretariat, the state-backed energy company YPF, which operates the FSRU, and other companies and entities involved found that there was no risk of an explosion.

Argentinian Energy Secretary Dario Martinez welcomed the decision after last week warning of the risk of gas shortages without the facility in operation.

"Now we have the peace of mind that we can count on Escobar's strategic plant to plan with certainty the comprehensive program to supply gas to meet demand in the coming months," he wrote on Twitter.

Argentina relies on imported gas to meet excess demand year round, but it only brings in LNG supplies in the cold months of May to September when an increase in heating demand outstrips local supplies.

The news of the resumption of the FSRU comes as the government seeks to rebuild gas production, which has fallen 21% to just 113.8 million cu m/d in December from a most recent peak of 144.4 million cu m/d in July 2019, according to data from the Energy Secretariat.

In December, the government launched a 2020-24 pricing stimulus program in hopes of reversing the slide ahead of the winter months of June to August when demand surpasses the annual average of 140 million cu m/d. It's a challenge that could prove harder than expected as the economy rebounds from an 11% contraction in 2020 with 4.8% growth this year, according to government estimates. This will likely boost demand for gas.

Argentina imported 20.4 million cu m/d in the first 11 months of 2020, up from 18.8 million cu m/d in all of 2019, even as a lockdown of the economy for the COVID-19 pandemic reduced demand.