Argentina could become a competitor in the market for Liquefied Natural Gas (LNG) global, with the development of the deposit of Dead cow that would replace Russian energy imports, the British financial daily Financial Times published on Friday.
“The departure of the West in Russia revives hopes to accelerate the development of the Vaca Muerta deposit”underlines the Financial Times article.
According to a recent Standard & Poor’s report quoted by the newspaper, if gas production in Vaca Muerta accelerates, Argentina could become “a rival of Australia and Qatar in the world market for Liquefied Natural Gas (LNG) at a time when the demand for it is growing”.
“The Argentine President Alberto Fernandez is highlighting the potential (of Vaca Muerta) to fill the void left by the growing Western embargo on Russian energy,” the newspaper added, recalling that during the president’s recent visit to Germany he described Argentina as “a reservoir of what the world needs right now: food and energy”.
According to Miguel Galuccio, president of Vista, the second largest producer of the Vaca Muerta, the deposit has already turned the country into a “oil exporter” – albeit on a small scale – and there is potential thanks to relatively low production costs.
In that sense, with only 50% use of its capacity -compared to at least 10% currently exploited- Argentina would generate more than US$ 30,000 million per year of foreign currency from exports, according to government figures cited by the article.
However, the Financial Times pointed out the difficulties in activating the deposit in the last decade and ensuring the necessary investments; among which he focuses on the exchange control that “did not allow the repatriation of profits.”
“After years of lobbying, the government has finally agreed that oil and gas companies can convert their profits from increased production into dollars” – in reference to the recently announced system of foreign exchange access for the sector – although it considered that “it is far from the freedom offered in other parts of the world.
He also questioned fuel subsidies in the domestic market and the lack of “energy infrastructure.”
The future Néstor Kirchner Gas Pipeline that will connect Vaca Muerta with the rest of the country and YPF’s search for locations to build a liquefaction plant are highlighted by the article as possible solutions to the problem.
“As Russia’s departure triggers a rethinking of the global energy map, the Argentine government needs to move quickly if it wants the Vaca Muerta companies to be rewarded with a wild horse instead of a lethargic cow,” he concluded.
