The Atlantic supply chain, for energy security and transition

Paolo Rocca sat down with Daniel Yergin, Vice Chairman of S&P Global, to discuss Argentina’s energy potential, decarbonization, and the future of oil and gas during CERAWeek in Houston.

Paolo Rocca provided a comprehensive overview of the Techint Group’s global strategy and priorities during a conversation with Dan Yergin, Vice Chairman of S&P Global, on March 20. As part of the Techint Group’s first year participating in the event, Rocca emphasized the importance of “organizing the Atlantic supply chain for the energy transition based on a more extended integration in the Western Hemisphere.”

Remarkable potential in Argentina

With vast resources of both oil and gas and lithium, the potential for Argentina to become a major player in supplying the world’s energy is growing, according to Rocca. The Vaca Muerta shale alone, he explained, is comparable in size and oil reserves to the highly profitable Permian Basin in the US, with even more available gas.

“Vaca Muerta is extraordinary,” he said. “Argentina could reach a level of producing one million barrels per day in six or seven years. This is possible, feasible.”

"Regarding the development of lithium, we are only at the beginning of this untapped opportunity," Rocca explained, adding that Argentina is the second largest resource of lithium in the world, yet only provides 5% of today’s global output.

Rocca added that Tecpetrol is currently piloting two direct lithium extraction (DLE) plants in Argentina. “The potential in Argentina is huge,” he said. “We anticipate Argentina could eventually provide more than 24% of the lithium worldwide. The actual production of today’s DLE projects are just a fraction of the true capability.”

Progress will depend on government reform, however. Rocca addressed the new Milei government and its challenges ahead. “His programs are sound, based on simple needs, like the reduction of government, and liberalization of the market. We need to improve the regulatory environment and reduce government interference. I have a lot of hope to start a new cycle in Argentina.”

Rocca explained the potential for Argentina to become a major player in supplying the world’s energy industry.-

Supporting the future of oil and gas

The demand for oil and gas will remain strong, Rocca said. “I see, even in an environment with the energy transition advancing, there will be a need for oil and gas in the long run. Renewables will have a big challenge in supplying the increased demand.”

Rocca mentioned Tenaris’s Rig Direct® service model will play a key role in supporting this strong demand, noting that, of the 1780 total operating rigs worldwide, the company currently serves 500 of those Rig Direct®. “Rig Direct® is guiding our transformation,” Rocca said. “And this requires an extensive manufacturing network and supply chain.”

This supply chain is becoming increasingly more important, Rocca added, as global disruptions like COVID and competitors like China threaten its security. “We compete in product and technology, serving our clients who want a secure supply chain,” he said. “The way China is managing its strategy is outside of market rules. We’ve also learned in the last years that we need a solid supply chain, and, to a certain extent, this requires a domestic deployment of services.”

Tackling the energy transition

With an increasing focus on decarbonization and the development of renewables, Rocca explained the need to refocus on an “Atlantic supply chain”, stressing the importance of a stronger integration in the Western Hemisphere and reducing the reliance on China.

“Imagine a supply chain that doesn’t depend on China,” he said. “I appreciate the initiatives that are going on in the United States with the IRA and in other countries, giving a jumpstart to forming an alternative. But you need to know that the market will drive the business.”

Decarbonization is key for any steel company, Rocca explained, as steel production represents 7-8% of the world’s emissions, 70% of which is created using blast furnaces. He explained a three-part plan to work towards low carbon production: increased use of electric arc furnaces (EAF), supporting those furnaces with renewable energy, and utilizing direct reduced iron (DRI) to supply the EAF.

“The decarbonization of the sector will be based on steps,” he concluded. “It cannot be done in the short term. It will require a long-term plan.”

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