2024-08-02 03:30:00
Former Punta Colorada Mineral Terminal Photo: Marcelo Ochoa
• The NK gas pipeline is designed and in fact performs this function to supply domestic demand only, It will replace the liquefied natural gas that needs to be imported in winter, as well as the gas oil and fuel oil that thermal power plants still need. Even if the second part of the NK natural gas pipeline and its supporting projects are completed, there will be no spare capacity to supply LNG plants in the winter. Not even small factory boats. (Unless this administration’s measures leave domestic demand to its own devices and there is the paradox of using natural gas to produce and export LNG and having to import more expensive LNG to meet domestic demand).
• LNG project will be licensed as RIGI, Therefore, not a single dollar will enter the country, regardless of the size of the investment, its form or the amount of exports, as this is one of the benefits of RIGI: free access to exports without restrictions, and the free use of the foreign exchange generated by these exports.
• Wellhead gas value at end of LNG program (not discussed) $1.75 MM btu, the average BTU selling price in the domestic market today is A$3.50. This will affect gift collection and overall revenue in Neuquén Province.
Two projects have been announced. One from PAE. The company announced that it will introduce a factory ship with an annual output of 2.45 million tons of liquefied natural gas by 2025. For this, you need 10/11 million cubic meters of natural gas per day. Without a new gas pipeline specifically from Vaca Muerta to the port where the ship is docked (a 560 km long pipeline seems strange just for this volume), the project can only be completed during the “summer” months (7 or 8 months) operation.
• If the PAE project also solves the Punta Colorada port problem, It would also have to build a pipeline from the San Martín gas pipeline (near the current National Highway 3) to Punta Colorada (near Playas Doradas), as well as allow the use of an existing terminal (for iron removal) engineering.
• The second project is a YPF project. Beyond that, today it remains an expression of desire, with no administrative or financial project, no national gas production partner, no external buyer, nor…, nor; some details announced by the current president of YPF: a ) The project will begin in 2027 with the introduction of a Petronas factory ship with half the capacity announced by PAE; b) By 2029 it will introduce two additional ships that do not yet exist and must be built for this purpose, each with The capacity is three times that of the first ship it announced to be introduced in 2027, and each ship will require about 16 million cubic meters of natural gas per day. Without exception, this would require building a natural gas pipeline of the size of North Korea’s nuclear pipeline, but including a second phase. C) They announced that starting in 2030/2031 they will start producing LNG in the first module of a plant built “on land”. If so, the proposed natural gas pipeline should be larger than the NK, with the potential to expand its transport capacity through greater compression.
So: a) if this is a very significant investment, b) the impact on gas production will be very small until the arrival of the two “big” ships announced by YPF (winter production today is 148 million cubic meters, between PAE (capacity of 148 million cubic meters) and the first YPF ship requires only 10% of this volume and only in the summer); c) The main investment in the “ship” phase is precisely non-domestically manufactured ships, i.e. the impact is minimal; d) The province where the ship is docked will have an important impact on the collection of total revenue and a certain impact on employment (it is an “intensive investment” activity); e) In Neuquén, the impact on royalties will be less than on sales to the domestic market What you pay is 50% less and the price will definitely come down (if you are a business extracting gas and selling it for $1.75, as I you sell it for $3.50); f) LNG exports do not bring in $ rain, because RIGI guarantees that they have these currencies abroad, g) the activities and work of Vaca Muerta will originate from these LNG projects only when these four ships are put into operation.
• Finally, just as additional detail: Vaca Muerta’s oil production will more than triple 2027, (1,600,000 barrels per day) Limited to ongoing pipeline work and continuity of announced projects. Oldelval is building the Duplicar Plus pipeline with a capacity of 360,000 barrels per day and will be completed in February 2025; YPF is building the Vaca Muerta Sur (all the way to Punta Colorada) with the same capacity, the first phase has already begun and Oldelval has pre-purchased the transportation Service starts with “Triplicar”).
This will allow Vaca Muerta’s activity to increase at a dizzying pace over the next four years, even faster than it is now. The exports here will amount to $29/3 billion, and, as I understand, if the government does not authorize RIGI to carry out this activity, those dollars will become foreign currency flows.
* Contador, former adviser to President Alberto Fernández on hydrocarbon policy.
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