What do the Gas.Ar 4 and Gas.Ar 5 plans entail?

The President of the Nation, Alberto Fernández, the Minister of Economy, Sergio Massa, and the Secretary of Energy, Flavia Royon, led the presentation ceremony of the extension of the Gas.Ar 4 Plan and the launching of the Gas.Ar 5 Plan for mature basins, two tools that will encourage gas production, attract investments and strengthen the national industry.

As stated by Fernández during the ceremony, “the world knows that we are the second largest unconventional gas reserve in the world, and it knows that we have gas to supply ourselves, to export to neighboring countries and gas to export beyond our limits, if we liquefy it and transport it. We have an opportunity that we cannot overlook: the development of all hydrocarbon production to generate self-support and to be able to export all the surplus”.

As part of the production incentive instruments, it was announced the launching of a new Gas 5 Plan, focused on the mature basins in different regions of our country (Cuenca Austral, Cuenca del Golfo de San Jorge and Cuenca Noroeste). Plan 5 will invite producers to submit bids for conventional gas or tight gas from mature fields, in order to supply gas to the North and General San Martín pipelines. As stated by Royon, “in this new edition we have had a federal look, a look that contemplates mature and conventional basins”.

The production incentives are part of the design of a policy aimed at the energy sustainability of Argentina, by ensuring the supply of gas for the generation of electricity needed by households and domestic industry, with its consequent impact on macroeconomic stability, as it implies foreign currency savings and a boost to exports.

The 2024-2028 production incentive plan is a virtuous instrument in the articulation of public planning and private initiative, by providing the necessary frameworks for the development of the hydrocarbon activity according to the reality of the different Argentine basins. The Gas.Ar 4 and 5 plans ensure that the Néstor Kirchner Gas Pipeline will be full for next winter and that the domestic market will be supplied for the next five years. In this way, the growth of investment translates into a greater substitution of imports and encourages industrial activity and small and medium-sized companies associated with regional value chains.

Longer contracts for hydrocarbon companies and SME added value

With the aim of generating a framework of predictable rules that favor investment, the Gas.Ar 4 and Gas.Ar 5 plans offer hydrocarbon companies the possibility of signing longer contracts and guarantee them competitive prices for their incremental production. When explaining the objective of the plan, Massa underlined that “the challenge is that in 2027 Argentina will have the same weight in energy within the gross product as in protein exports”.

First, the current Gas.Ar Plan (or Gas 4 Plan) will contemplate the voluntary possibility for producers to opt for an extension of their gas sales contracts already signed for the Neuquina Basin for a term of another four years (2024-2028). In addition, in the case of conventional production in the Austral and Golfo de San Jorge basins, companies will also have the option of a voluntary extension of the volumes already contracted.

In this regard, Royon explained that “with this Gas Plan we expect the maximum gas production for our country by 2024, this allows us to save foreign currency and contributes to fiscal savings. It also involves the generation of added value for the SMEs where the activity is developed”.

Some of the public and private players present during the ceremony included Agustín Gerez (President of ENARSA), Pablo González (President of YPF), Pablo Iuliano (CEO of YPF); Diego López (Capex); Mariano Fuentes (ExxonMobil); Francisco Villamil (Vista Oil & Gas); Allan Blumenthal (Petrobras); Sergio Cavallin (Pluspetrol); Alejandro Ocampo (Shell); Manfred Böeckmann (Wintershall-DEA); Marcelo Midlin (Pampa Energía); Javier Rielo (Total Energía); Hugo Eurnekian (CGC-Compañía General de Combustible); Ricardo Markous (Tecpetrol) and Marcos Bulgheroni (Pan American Energy).

Strategizing towards self-supply and energy development

Massa also detailed the savings and investment figures that these plans imply for the Argentine economy, “the development of the Gas Plan implies to stop importing and give the Argentine people the gas we have, which represents a saving of USD $19 billion until 2028. In terms of investment, USD $7 billion are destined for the next 5 years. The Minister later added that “for next year alone this represents a saving of USD $3.2 billion in energy imports”.

On her part, Royón, considered that “this Gas 4 and 5 Plans are one more step in the Government’s strategic path towards Argentina’s self-supply and energy development. We are making decisions for the medium term that provide predictability to investors and allow the country to have access to competitive energy and guarantee its self-supply for families and also for the industrial development of our country”.

The Néstor Kirchner pipeline

The gas pipeline, whose first section between Tratayén (Neuquén) and Saliqueló (Buenos Aires) is being executed, will have its volumes assured of 11 million cubic meters per day, and will be put out to tender to be available in June-July 2023. Another 3 million cubic meters per day are to be incorporated as of January 2024. Companies that have chosen to extend the benefits of the Gas.Ar Plan until 2028 will have priority access to the new pipeline.

About the Author: Felipe Gaitán Michelsen