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Argentina Discusses Natural Gas Exports to Brazil via Bolivia

Argentina and Brazil are discussing the idea to export natural gas from Argentina’s Vaca Muerta shale play to Brazil via pipelines in Bolivia, by potentially reversing the flow northbound to Brazil.

Energy companies from the three South American countries have started talks, but progress has been slow and there are a lot of issues to overcome to make such gas flows happen, industry executives and analysts have told Reuters.

The idea is to reverse the southbound flow of gas pipelines in Bolivia, which used to carry gas to Argentina. The reverse flow would ship Argentinian natural gas to Brazil via the Bolivian pipelines.

Despite being South America’s top crude oil producer, Brazil has faced a shortfall of natural gas as its demand is soaring. The gap in supply has led to Brazil importing more LNG, especially when hydropower conditions aren’t optimal. For example, the worst drought in nine decades in 2021 forced Brazil to import a lot of LNG. But with the high volatility in LNG prices in recent years, Brazil is looking to avoid being exposed to the wild swings in the market.

The easiest option is arguably imports from Argentina’s Vaca Muerta, which is estimated to hold recoverable resources consisting of 16 billion barrels of oil and 308 trillion cubic feet of natural gas. Those numbers make the Vaca Muerta the world’s second-largest shale gas deposit.

In July last year, Argentina inaugurated a natural gas pipeline from Vaca Muerta to a town in the Buenos Aires province, as part of its efforts to become energy independent and stop paying billions of dollars for LNG imports.

However, to begin thinking of pipeline exports to Brazil, Argentina would first need to complete projects to bring the Vaca Muerta gas to the Bolivian border and start negotiating about tariffs, executives and analysts involved in the discussions told Reuters.

YPFB, the state company of Bolivia, has recently rejected a proposal from Argentina and Brazil to pay a tolling fee to have Argentinian gas pass across Bolivia, executives from the companies involved in the talks told Reuters.

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By Charles Kennedy for Oilprice.com

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