“The key to Vaca Muerta is exports”
Tecpetrol CEO Ricardo Markous was one of the speakers at the first energy summit held between the two countries, organized by the Argentina-Texas Chamber of Commerce.
The Argentina Oil & Gas Patagonia 2022 opened with a flourish, featuring the first bilateral energy summit between the U.S. and Argentina presented jointly by Marc Stanley, United States Ambassador to Argentina and Omar Gutiérrez, governor of Neuquen. They were flanked by Neuquen city mayor Mariano Gaido and by senior executives from the top oil & gas operators and service companies in the sector.
Speaking to a full house at the Hilton Garden Inn in Neuquen, Stanley referred to the sense of gratification that comes from seeing the entire sector working together towards the same goal. "We are standing before a huge opportunity where the objectives pursued by Neuquen are the same as the priorities of our embassy, and this will lead to strengthening trade relations and enriching exchange between our two countries."
Ricardo Markous began his speech by referring to the historic relationship underpinning the exchange of knowledge between the two countries. “Argentina has benefited enormously from the experience of the United States. We have learned so much from what was achieved in North American wells. That vital know-how enabled us to develop Fortin de Piedra far more quickly than foreseen, to the point where we surprised the Americans themselves!”
Relationships and projections that grew out of shared activities and development to find themselves pitted against unexpected realities. “The results of gas and oil production activities in Vaca Muerta exceeded our expectations, rapidly saturating transport capacity. This must be the next step on our forthcoming agenda: to develop infrastructure so that the whole operation can continue to grow. Regarding oil, we have the Oldelval pipeline expansion project, enabling us to go from 226,000 barrels per day to 450,000, as well as work to expand the port terminal and reactivate the Trans-Andean pipeline known as OTASA. However, if we only look to the new capabilities brought by taking advantage of existing facilities, it will not be enough; it will be necessary to build a third oil pipeline before 2030,” emphasized Markous.
Turning from the present towards the future, gas will play an increasingly important role, leading the energy transition. The region is facing the need for a fundamental shift in structure and dependencies. “We must substitute a number of different imports. Now, we are looking at the opportunity to export gas and electricity to Chile and Brazil, which means that many interconnections are also necessary. Our country's reserves are more than enough, we just have to connect Vaca Muerta to the rest of the world."
Demand at a domestic level is largely covered, so the key to Vaca Muerta is to export, which could shift the balance of payments by as much as 17 billion dollars. The resources are there, as is the will to succeed, the know-how, and the market conditions. “The Vaca Muerta agenda is extremely exciting. Prices without intervention and the free availability of foreign exchange could further enhance the benefits of this promising situation.
In Fortín de Piedra, for example, we invested USD 2.3 billion in an area of 220 km2. In barely eighteen months, we started production and took output to 16 million cubic meters per day. Thanks to the national investment incentives program known as Plan Gas 4, we continued to increase output and in May of this year, Fortín de Piedra broke its daily production record of 20.6 million cubic meters.”
These are heady numbers, reaching new heights and encouraging further investment to continue producing. “The regulation of Decree 277 concerning the availability of foreign currency, effective in January, will be key for what’s around the corner. Then there’s the issue of infrastructure. It’s very likely that we will be able to have the gas pipeline up and running by next winter in the Southern hemisphere. However, more concerted efforts must be made between companies, the national government, the provincial government, institutions and social organizations.”