Water/Energy crisis: Argentina will export natural gas to Brazil at price 10 times that charged in Argentina

RIO DE JANEIRO, BRAZIL – The former Enarsa (now Integración Energética Argentina, IEASA) signed an export contract with Brazilian thermal power plant Ambar Uruguaiana Energía for nearly 57 million cubic meters at US$43.80 per million BTU, a final cost of US$92 million, according to the Energy Secretariat.

The extraordinary thing is that Argentine consumers and power generators pay an average of US$2.87 for gas at this time of year, thanks to the contractual commitment of demand on fixed terms and in the medium term (4 years) under the Gas Plan.

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In other words: While domestic demand is satisfied – except in winter, when it increases exponentially due to low temperatures – thanks to the global energy crisis, Argentina can take advantage of the worldwide energy crisis to earn millions by exporting to neighboring countries.

This month, IEASA submitted a bid to import liquefied natural gas (LNG), as the price of this commodity in Europe has risen to US$50 per million BTU. In the first tender, the only offer was above US$60, while in the second, agreed the previous week, it was below US$38, a trader told El Cronista newspaper.

The difference between the import cost and the selling price to Brazil remains in the former Enarsa after deducting export duties (withholdings) and taxes. The market estimates that it would be a little more than US$7 million.

Brazil is 60% dependent on hydroelectric power generation. But for the past two years, the country has been suffering from drought (affecting the historic gradient of the Paraná River) and has had to resort to other sources, such as importing liquefied natural gas or electricity from Argentina, which can cost more than US$200 per megawatt-hour.

The Ambar Uruguaiana power plant is located in Rio Grande do Sul and was purchased by the J&F Group from the Argentine company Saesa a few months ago. The company has a supply or payment contract with the Brazilian administrator of the electricity system, so even at this gas price, it is better to generate energy than to pay without entering the system.

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