Argentina Pushes for Gas Pipe to Brazil: Press

Argentina has pitched the construction of a $4.9bn pipeline to flow gas from its Vaca Muerta shale formation to Brazil and is seeking financing for the venture, Reuters reported on September 14 citing a diplomatic source. 

Argentina's envoy in Brasilia, Daniel Scioli, proposed taking the project forward in meetings with Brazilian president Jair Bolsonaro and his mines and energy minister Bento Albuquerque, the agency said.

Both governments are interested in the project and there have already been talks with investors, Reuters said. Albuquerque and his Argentine counterpart Dario Martinez will hold a video conference to discuss the plan before the end of this month.

The proposed pipeline would run 1,430 km from the Neuquen province to the Brazilian border at Uruguaiana and then a further 600 km to the city of Porto Alegre, where it will connect with southern Brazil's gas distribution system. 

In an interview with Brazil's Valor Economico financial paper, Scioli said Brazil, an LNG importer, would gain from having cheaper gas for its industries in greater volume. Gaining a larger market in Brazil would also spur investment in Vaca Muerta. The project would take three years to complete, costing Argentina $3.7bn and Brazil some $1.2bn, the diplomat said.

Vaca Muerta has experienced bottlenecks in recent years, with infrastructure capacity constraining gas production. Earlier this year, Argentina canned plans to expand LNG exports from the formation by constructing a new liquefaction complex in Bahia Blanca, citing oversupply in the global gas market. The Vaca Muerta fields also supply gas to Brazil and Chile via existing pipelines. 

Earlier this summer, state YPF issued a force majeure notice to Exmar, whose floating LNG vessel Tango has been idle since Covid-19 hit production in Vaca Muerta in late March. Exmar is contesting its client's claim.