BUENOS AIRES – Argentina will begin exporting natural gas to neighboring Chile before the end of 2018, the energy ministers of both countries said on Thursday.
Chilean companies are in talks to sign import deals and the first flow of gas across the Andes could come in October or November of this year, Chile energy minister Susana Jimenez said in an interview in Argentine town of Bariloche at the G20 Meeting of Energy Ministers.
“We see a great opportunity for mutual benefit,” she said.
The gas could come both from the Neuquen basin, home to Vaca Muerta, and from the Austral basin in southern Argentina, she added.
The two South American countries had previously signed deals allowing for the export of gas or electricity in emergency situations, but required that an equivalent amount be re-imported within twelve months.
The gas could be used for electricity generation, replacing imports from elsewhere, or to heat homes in areas where families still depend on wood, a source of pollution in the center-south region, Jimenez said. Chile produces little hydrocarbons of its own.
Chile was a significant buyer of Argentine gas supplies in the late 1990s and early 2000s, importing up to 20 mcm per day through a network of pipelines. But deliveries waned in 2004 and then came to a halt as production fell in Argentina, causing shortages there.
The production decline in Argentina came as companies in the country started pulling back on investment, discouraged by sagging profits after the government capped wellhead gas prices. This meant domestic prices were amongst the world’s lowest and gas production subsequently fell to a 16-year low of 113.7 mcm per day in 2014 from a record 143 mcm per day in 2004.
Since then, however, production has recovered to 122 mcm per day, driven in part by the development of Argentina’s shale and tight gas resources. This has ended the shortages and made it possible for the country to export again at times of low demand.
Since taking office in December 2015, President Mauricio Macri has sought to loosen labor rules and boost infrastructure to attract investment.
Rising output from Vaca Muerta could help the country export more than it imports by 2021, Argentina’s energy minister Juan Jose Aranguren said at a news conference. The country is set to import slightly more than 50 cargoes of liquefied natural gas (LNG) this year, down from 68 last year and 90 in 2015.