In a remote and dense desert of South America, a phenomenon that very few people would have bet on a few years ago is taking shape: Argentina becomes a real energy power. In just a few months, the country has gone from being a net importer of energy to that of an exporter, a trend that is growing and which does not seem to have an end in the short term. A fact which reveals this change has been confirmed in recent hours with the inauguration of the “gas pipeline reversal” (they metaphorically reversed it) which was previously used to import gas from Bolivia and which will now be used to export gas from Argentina to its northern regions and Brazil. This is all due to the Vaca Muerta oil and gas boom.
This Monday, Argentina inaugurated work to reverse the Northern gas pipeline, which for almost two decades authorized imports of natural gas from Bolivia and will now be able to supply northern and central Argentina and export to Brazil gas extracted from the colossal Vaca Muerta unconventional hydrocarbon formation.
The work, started last year and completed two months ahead of scheduleinvolved the expansion of the Northern gas pipeline by 62 kilometers, reversing the direction of gas injection in four existing compression plantsand the construction of a 122-kilometer gas pipeline in the province of Córdoba (center).
Argentina stops buying gas from Bolivia
The project required an investment of $710 millionof which 540 million were financed by a loan from the Latin American Development Bank CAF. Change the direction of flow in pipes now makes it possible to transport gas from Vaca Muerta, in the southwest of Argentina, to the provinces of Córdoba, TucumánLa Rioja, Catamarca, Santiago del Estero, Salta and Jujuy, to meet the demand for thermal energy production plants, industries and homes. In addition, this will allow Argentina exports natural gas to Brazilfirst using the Northern gas pipeline, then the network of pipelines that go from Bolivia to Brazilian territory.
After two decades of gas purchase contracts with Bolivia, Argentina stopped importing from that country last month, a move made possible by increasing production volumes at Vaca Muerta, the second largest reserve world of unconventional gas and the fourth oil of this type.
The Ministry of Energy itself announced thisand this way: Argentina will save $1 billion in foreign exchange per year; The development of new industrial activities such as lithium extraction will be encouraged; and, secondly, national gas could be exported to other countries in the region.
“Argentina has chosen where to invest 700 million dollars to return to more wealth. With safe and non-intermittent gas, it will generate well-being that we did not have until now. We are going to use our gas, at a third of the value that we used until now to import We came to celebrate a work of this magnitude, which the Milei government started and finished in record time”, says the Chief of Staff, Guillermo. Francos.
For his part, the Minister of the Economy stressed: “From the Ministry of the Economy, we are working in collaboration with private companies to release the first part of the work which has not been awarded and the other two parts which were not even the subject of a call for tenders. let’s get it energy self-sufficiency destroyed by previous management“But not only that, Argentina is also seeking its own revolution with oil. Crude oil and gas form a perfect tandem to generate hundreds of millions of dollars in revenue that can help replenish the country’s foreign exchange reserves and revive the economy.
Now it’s oil time
In September, a team of ten, working in a corner of the vast Vaca Muerta shale formation in the western province of Neuquén, finished laying and welding the giant 75-centimeter-thick carbon steel tubes together to build an oil pipeline. The goal is to transport crude oil nearly 600 km to the Atlantic. Vaca Muerta is the fourth largest shale oil field in the world (the largest in South America) and the second gas. Pipeline extending south expected to reach the town of Allen130 km away, at the end of this year. A second section, scheduled for completion in 2026, would transport crude oil a further 440 km to Punta Colorada on the southeast coast, according to the Financial Times.
“This is the country’s first major pipeline designed entirely for export,” says Manuel Castillo, who manages the project for Argentina’s national energy company YPF. “Over time, we will increase the transport capacity of the basin by 70%”.
Vaca Muerta is poised to deliver on the promise touted by successive governments in the 14 years since its discovery, as new infrastructure eases transportation bottlenecks that have long hampered production.
Another new pipeline project, completed last year, allowed oil exports to Chile to resume after 17 years. Another, scheduled for completion in 2025, will increase flows to the coast of Buenos Aires province. The basin’s daily oil production has quadrupled over the past five years, from 90,000 barrels per day in 2019 to 400,000 barrels per day (bpd) in September 2024 and could exceed 1.1 million in 2030, according to the Chamber of Commerce of Hydrocarbons CEPH. This would allow exports of nearly 700,000 b/d.
The most complex infrastructure for exporting much of the natural gas is still in place. However, in addition to the pipeline inaugurated to transport gas to Brazil, a new gas pipeline to Buenos Aires has doubled production since 2019, bringing it to 70 cubic meters per day in 2024, which has crushed import needs. This year, Argentina, in an energy deficit since 2011, should earn $5 billion net from its exports.at a time when its foreign exchange reserves are dangerously low.
However, it is worth remembering that the economy is still subject to strict foreign exchange and capital controls and that the country still needs to resolve its macroeconomic challenges before be able to attract the investment needed to become a significant exporterwarn businessmen. However, the election almost a year ago of President Javier Milei, who promised to lift these controls and deregulate the sector, encouraged investors.
