Argentina will start piping in its first regasified natural gas supplies from Chile next week, helping to reduce imports of diesel for use as power plant fuel during the Southern Hemisphere winter, a source in the Energy Ministry said Friday.
The deliveries of 5 million cu m/d will start May 11 and continue for three months, the source said on the condition of not being named.
Argentina will pay $6.90/MMBtu for supplies from the Mejillones LNG regasification terminal in Chile, and $7.20/MMBtu for deliveries from the Quintero terminal, the source said.
Argentina and Chile made a preliminary agreement for the deal at the start of the year with the aim of helping Argentina to meet a surge in gas demand during the May-September cold season.
Argentina relies on gas to meet 50% of its energy needs, and a surge in demand for residential heating in winter can limit supplies for power plants. This forces them to replace gas with costlier diesel supplies.
"We are looking to save money for the state by importing gas instead of diesel, which is more expensive," the source said.
The gas imports are expected to replace 2.5 million barrels in diesel imports, according to an Energy Ministry estimate reported by Telam, the state newswire.
Argentina will import the supplies over cross-border pipelines built in the 1990s to export up to 20 million cu m/d of Argentine gas to Chile. Argentina had to curb the exports to virtually zero after its own production started to decline in 2004 on maturing reserves, few finds and low investment.
The gas imports are part of a wider strategy to increase deliveries from neighboring countries to meet demand, which rises to an average of 180 million cu m/d in winter from an annual average of 130 million cu m/d.
The surge in demand has led to chronic shortages in the cold season since domestic production started declining from a peak of 143 million cu m/d 2004. Output has since dropped 16% to 120 million cu m/d, according to Energy Ministry data.
Bolivia already exports about 15 million cu m/d to Argentina, while another 15 million cu m/d is brought in via two floating LNG regasification terminals.
Another future gas supplier is Uruguay, which has agreed to sell about 5 million cu m/d to Argentina from a floating LNG regasification terminal, starting in 2017.
