Argentina’s gas production falls short of expectations ahead of winter

RIO DE JANEIRO, BRAZIL – Argentina’s natural gas production fell by 11% year on year in January to 116.011mn m3/d (4.097bn cf/d) in the first full month of a new upstream stimulus program, reviving supply concerns heading into winter.

Argentina’s state-controlled YPF, the country’s largest hydrocarbons producer, saw gas output in its operated areas shrink by 25% to 29.382mn m3/d, according to the latest energy secretariat data.

In the southwestern province of Neuquén, which encompasses most of the Vaca Muerta shale formation, gas output declined by 14%  to 62.11mn m3/d, of which 69% was unconventional, according to provincial data.

The January data suggests that the government’s gas production stimulus program may fall short of expectations ahead of winter, when gas demand soars on heating requirements.

If Argentina fails to procure enough gas, industries could see a revival of gas supply curtailments as early as May when the southern hemisphere winter begins.

In December 2020, the government awarded 67.42mn m3/d of gas supply in an auction aimed at procuring more than 70mn m3/d of gas at subsidized wellhead prices for power generation in 2021-24.

Anticipating a shortage, the government recently launched a tender for the short-term lease of a regasification vessel, and opened a supplemental auction for extra wintertime gas.

Argentina has an LNG import terminal in Escobar, Buenos Aires province. It also imports pipeline gas from Bolivia, where gas output is declining. Argentina imports some regasified LNG from Chile as well.

In terms of crude, January output fell by 5%, on the year, to 486,919 b/d. YPF’s crude production slipped by 4% to 226,319 b/d.

Oil production in Neuquen grew by 7% in January to a record 172,865 b/d, of which 78% was unconventional.

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