Argentina Weighs Natural Gas Pipeline Venture with China

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Researched by Amir Richani for Industrial Info Resources (Sugar Land, Texas)--Argentina's energy ministry is seeking Chinese investors to construct the second section of the Nestor Kirchner gas pipeline. This is one of the flagship projects of President Alberto Fernandez, who wants to continue developing central Argentina's Vaca Muerta Formation before his term ends in December.

Industrial Info is tracking more than US$6.5 billion worth of active projects as part of the Nestor Kirchner gas pipeline. Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Pipeline Project Database can click here for a list of detailed project reports and click here for a list of related plant profiles.

Last week, Argentina's energy minister met with Power Construction Corporation of China (Power China) (Beijing) to discuss financing the second section of Nestor Kirchner. Fernandez also said Argentina is making progress on a deal with the Brazilian Development Bank to help finance the expansion.

With rising inflation and a lack of foreign currency, Argentina has been spurring on its energy industry with the hopes of generating income through exports. As a result, the government aims to develop additional midstream capacity to cope with higher oil and gas production volumes from the Vaca Muerta shale reservoir, with the help of international investors.

"Yesterday, we worked on financing the second stage of the gas pipeline, based on a pre-agreed loan with Power China," said Flavia Royon, Argentina's energy minister, last week. "When the entire work is completed, our country will save almost 8,000 million dollars annually."

Power China entered the Argentine market in 2011. Since then, the company has signed and constructed more than 30 projects in nine provinces, worth more than US$5 billion. Power China is Argentina's largest contractor, accounting for more than 1 gigawatt in renewable-energy projects.

The first section of Nestor Kirchner, which runs 563 kilometers, will be inaugurated on June 20. It is expected to transport 11 million cubic feet per day of natural gas from Vaca Muerta to Salliquelo, a city in east-central Buenos Aires Province.

The government financed the first stage to reduce the nation's dependency on imports and ease midstream bottlenecks from Vaca Muerta.

"Already in the second half of 2023, with the gas pipeline operational, we will save 2,000 million dollars, which will double for the following year, with a fiscal improvement of 4,200 million," Royon said.

The second section of Nestor Kirchner would extend from Salliquelo to San Jeronimo, with a length of 484 kilometers and a diameter of 36 inches.

Argentina also is constructing the Salliquelo and Tratayen compressing gas plants, each of which have capacities of 5 million cubic meters per day, to boost operations on the Nestor Kirchner pipeline.

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