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Argentina’s imports of LNG may decline 20% in 2016

Argentina’s imports of LNG may decline 20% in 2016

WASHINGTON: Argentina’s imports of LNG could decline by 20% or more in the 2016 winter season compared with last year, as the result of a recently announced agreement to import natural gas from neighboring Chile, local media in both countries reported Monday. From May through September, Chile will export 5.5 million cu m/day of gas to Argentina under the accord reached Saturday.

Gas to be exported from Chile will be sourced on the global LNG market — mostly likely from Asian suppliers, according to local media reports — and delivered to both of the country’s import terminals, GNL Mejillones in the north and GNL Quintero in central Chile.

The gas will be delivered to Argentina via existing pipelines that cross the international border in the Argentinian provinces of Salta in the north and Mendoza in central Argentina.

In the 2015 winter season, running from May to September, Argentina imported the LNG equivalent of 3.8 Bcm of gas, according to data from Platts Analytics. Assuming gas demand remains stable this year, imports from Chile, which would total roughly 836 million cu m, would cut Argentina’s LNG demand by upwards of 22% during the winter months.

While the gas import/export agreement reached between Argentina’s energy minister, Juan Jose Aranguren, and Chilean counterpart Maximo Pacheco made headlines Monday, the countries also agreed on additional plans to further energy-related cooperation.

The two nations agreed to expand bilateral oil and gas exploration and development activities in the southern region of Patagonia, and will seek out new ways improve the integration of their electricity grids. In 2004, Argentina’s exports of natural gas to Chile were halted as a result of declining national production. Over the last decade, Argentina’s gas output has fallen by approximately 20%, making it a net importer of natural gas.

Argentina produces around 117 million cu m/d of gas while consuming an average 130 million cu m/d. The national deficit is bridged through pipeline imports from Bolivia and LNG imports to the country’s two terminals — Escobar in the north of Buenos Aires province and Bahia Blanca in the south.