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From: <newsletter@alfarolaw.com<mailto:newsletter@alfarolaw.com>>
Date: December 22, 2017 at 5:45:00 PM EST
To: <jbiden@lionhallgp.com<mailto:jbiden@lionhallgp.com>>
Subject: THE MINISTRY OF ENERGY WILL AUTHORIZE PRIVATE COMPANIES TO IMPORT LNG


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The Ministry of Energy Will Authorize Private Companies to Import LNG

Argentina’s Government plans to authorize the regasification plants of Bahía Blanca and Escobar so that private companies can contract storage capacity and regasification of LNG. The aim is to start importing that fuel in order to replace diesel, the price of which is higher. This measure is in line with the economic opening policy that will be promoted so that electricity generation companies are able to buy the fuel they consume. In this way, private companies will gradually recover control of imports again.

At the moment the project is just a draft and the intention is to implement it gradually because currently the state-owned Enarsa S.A. (renamed "Integración Energética Argentina S.A.") has priority to import cargos, mainly in winter. During the rest of the year, it will probably be easier to find opportunities for private companies to rely on that infrastructure.

The ideal is to have firm transportation capacity ensured. Should this not be the case, there is the option of storing the fuel in order to take advantage of the moment when transportation capacity arises, even if it is interruptible. If this is the case, the costs increase significantly because currently there is no storage plant on land. Therefore, the private company would have to rent the storage capacity from the ship that brings the fuel.

The issue is that having such a ship stopped at the port for a day has a cost that ranges between 50 thousand and 100 thousand dollars.

The previous government had considered the possibility of building a regasification plant with storage on land. The location chosen was close to Puerto Rosales. It had been evaluated by Enarsa with PDVSA (Petroleum of Venezuela), but the construction was never carried out

Now the Ministry of Energy is evaluating the possibility that imports be made through the Escobar and Bahía Blanca plants via a process called "open season". The process consists in establishing a period during which the concessionaire (in this case it could be Enarsa) receives service requests from potential users, establishes fees and allocates capacity according to some type of non-discriminatory criterion. Enarsa wanted to apply a similar mechanism, but in the opposite sense, when it explored the possibility of renting the Mejillones regasification plant to Chile and that it was directly Enarsa that would tender the import of LNG from the Chilean terminal.

Another Player Arrives to Vaca Muerta

The independent oil company GeoPark arranged with Pluspetrol the acquisition of three oilfields for 52 million dollars. The transaction needs to be approved by the province.

Pluspetrol will do away with three blocks in Neuquén with production and projection in unconventional.

GeoPark will be the buyer, a so-called independent company in the United States, which will pay 52 million dollars for Aguada Baguales, El Porvenir y Puesto Touquet. The foreign company, listed in the stock market in New York, is already active in Argentina and in the basin of Neuquén, but in the area of Mendoza.

The negotiations must be approved by the government of the province. It is believed that it could be approved not before the first trimester of 2018.

According to the information provided by the international firm, the blocks add a production of 2.700 oil barrels equivalent per day (boepd), from which 70% is of light oil and 30% of gas. Moreover, proven and probable reserves were verified, for about 12 to 14 million of oil barrels equivalent (Mmboe) and reserves 3P of approximately 18-20 Mmboe.

The areas have, with exploratory resources approximately 15-30 Mmboe plus additional potential in the unconventional play of Vaca Muerta.


If you need further information you may contact Carlos Alfaro at cealfaro@alfarolaw.com

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