An unusually warm winter in the southern hemisphere threatens to burden Argentina with an excess of liquefied natural gas.
Argentina is spending about $1.8 billion to import 44 LNG cargoes this year, with 20 already delivered and the rest expected to arrive in the coming months. The mild weather means that some of these supplies may not be needed as households keep the heating off.
LNG traders watch Argentina’s imports closely because it is a key buyer in the volatile spot market, and the country’s bonds monitor its energy trade because it affects the country’s fragile foreign exchange reserves.
After a mild winter last year, state energy company Energia Argentina said it was able to sell three of its surplus loads to other countries and make a profit from the operations. But this year, Argentina agreed to pay about $20 per million British thermal units, and weak demand in Europe has since pushed prices down. That leaves Argentina with little opportunity to turn around loads and suppliers are unwilling to renegotiate to lower prices for fuel that has already been contracted, traders familiar with the matter said.
Energia Argentina may delay the arrival of one or two loads, according to one person. This year’s Argentine suppliers are BP Plc, TotalEnergies SE, Shell Plc, Vitol SA, Gunvor Group Ltd. and Glencore Plc.
A spokesman for Energia Argentina declined to comment. Representatives for the country’s Energy Secretary did not respond to a request for comment.
New pipe
A new natural gas pipeline from the Vaca Muerta shale patch has been completed on time and in about a month will begin increasing domestic flows by 11 million cubic meters per day, about 8% of the production of the ‘last winter, reducing the need for imported LNG.
The pipeline “will enable huge savings in hard currency because we will never again need large-scale LNG imports,” Energy Secretary Flavia Royon said last week.
–With the help of Anna Shiryaevskaya.
