From June 20, 2023, the Néstor Kirchner Gas Pipeline, which will transport gas from Vaca Muerta to Salliqueló, province of Buenos Aires, should be in operation.
That is fixed in the contracts that the State ─through Enarsa─ signed with the companies participating in the construction.
Most bids have already been awarded, although key aspects still need to be solved. And time is running out.
Nevertheless, the Ministry of Economy is confident that the work will be ready by the estimated date and that it will allow reducing natural gas and LNG imports.
WHY IS IT SO IMPORTANT?
According to the government, the construction of the Néstor Kirchner gas pipeline will expand the current capacity of the transportation system, facilitating the transfer of gas from Vaca Muerta to the country’s large urban centers.
In addition, the Ministry of Economy states that the first stage of construction will generate 10 thousand direct jobs and another 40,000 indirect jobs.
WILL THE KEY DATE BE REACHED?
The contracts establish a system of rewards and penalties to meet that date.
For each day that the work is delayed, the companies will have to compensate with US$100,000, while they will receive that amount from Enarsa for each day in advance that they deliver the work.
Enarsa estimates that progress will be made at a rate of 4.5 kilometers per day for 100 days.
If these deadlines are met, there would be plenty of time to reach the so much pondered Jun; however, they recognize that along the way, there will be imponderables that may delay the construction.
WORK BEGINS
In the first days of October, according to what Bloomberg Línea has learned from a source with knowledge of the matter, twenty trucks per day will leave the SIAT factory (belonging to the Techint Group) in Valetín Alsina to the different stockpiles that have been set up along the route of the first two sections of the work.
While between December and January, trucks will be added from Bahía Blanca transporting the pipes imported from Brazil. By that date, it is estimated that there will be up to 60 trucks per day transporting the 12-meter pipes.
These numbers contradict Luit Betnaza, director of Techint, who stated that they expect to ship 180 trucks per day, according to the website Río Negro.
On Tuesday, September 28, Enarsa announced the transfer of the first pipes corresponding to the complementary works of the Néstor Kirchner Gas Pipeline, which are vital for the operation of the trunk work.
These 7,400 36-inch and 30-inch pipes purchased in 2008 and 2012 were in disuse and will be used in the Mercedes-Cardales gas pipeline and the NEUBA II loop.
First stage: Vaca Muerta (Tratayen) – Salliquello (province of Buenos Aires), three sections:
- Section 1: 220 kilometers of pipeline extending from the connection to the Transportadora Gas del Sur system (at the Tratayen Conditioning Plant) to kilometer 220 of the gas pipeline route, located in La Pampa, awarded to the joint venture formed by Techint and Sacde (Marcelo Mindlin).
- Section 2: 220 kilometers of pipeline extending from kilometer 220 of the route in La Pampa to kilometer 440 in the same province, awarded to the joint venture formed by Techint and Sacde.
- Section 3: 133 kilometers of pipeline extending between kilometer 440 of the route in the province of La Pampa, and Salliqueló in the province of Buenos Aires, awarded to the company BTU S.A.
VALVES, THE ENIGMA THAT WORRIES THE GOVERNMENT
A key point for the operation of this pipeline is the 140 valves. After the first two bids to award this service were unsuccessful, Enarsa went ahead with a direct contracting, which has not yet been resolved.
A source from the state-owned company stated that it would be resolved in the next few days and would not affect the fulfillment of the deadlines.
FINANCING
The State will finance the first section of the work between 2022 and 2023.
Part of the work will be covered by ARS 60.2 billion (US$408.6 million) raised through the Solidarity Contribution to Great Wealth.
Another ARS 118.2 billion will come from National Treasury Contributions, the “Transport.Ar” gas pipeline program, and the accumulated budget credit.
According to the last management report submitted to Congress by the Chief of Cabinet, Juan Manzur, another ARS 60.8 billion of Funds from Article 7, paragraph 5 of Law 27,605.
For Section 2 of the work, for which Sergio Massa said they are moving forward in the bidding process, the government expects the financing to come from private sources.
WHAT WILL BE THE IMPACT OF THE GAS PIPELINE?
On June 20, Massa expects that Agustín Gerez, Enarsa’s president, will give him the operating certificate that guarantees that the gas pipeline has already passed the hydraulic tests and is authorized to transport gas.
How will it impact the commercial energy balance to have the pipeline in place by that date? How much will the government save? Bloomberg Línea consulted three specialists to discuss these questions.
Daniel Gerold, industrial engineer and president and founder of the consulting firm G&G Energy, pointed out that the impact of this first stretch of the pipeline will be positive, although limited because it covers one-third of the cold months and will represent one-sixth of the equivalent volume of gas imported in 2021 in those months.
According to Gerold, the outlook will improve by the end of 2023, and the impact will be higher throughout winter 2024.
For Daniel Dreizzen, director in Energy of the economic consulting firm Ecolatina, “the impact can be quite significant” because only in the first stage “there are 11 million cubic meters per day that you can save”.
He pointed out that a critical factor for the completion of the project is whether the compressors are delivered on time. In this sense, line 5 of the bidding called by Enarsa for the compressor work in Mercedes was awarded to the company Esuco.
In the second stage, 22 million cubic meters per day could be saved, and then 39 million cubic meters per day.
“To go from 11 to 22, we need two compressor plants, which is a big difference; to reach 39, we have to make the other diagonal”, remarked Dreizzen. According to the specialist, “saving a third of the LNG is a lot of money, about US$1 billion”.
Juan José Carbajales, lawyer and former Undersecretary of Hydrocarbons of the Nation, points out that the gas pipeline “is all on track to arrive on June 20, but it is a very tight schedule for a major work, in a context in which there are not enough pesos or dollars, everything can get complicated”.
According to the lawyer and former official, if it does not arrive on June 20, it could be on July 20 or August 20, “it does not matter; any time it arrives, it will be welcome and more than useful”.
Regarding the Gas 4 Plan announced by the government ─it has not yet been tendered─, Carbajales ─promoter of the program since its inception─, pointed out that the objective of this plan is “to fill the new gas pipeline” and affirmed that “there is not going to be a problem in filling the pipe”.
Furthermore, he assured that extending this program from 2024 to 2028 “confirms that the gas plan works and gives producers perspective and stability to the demand”.
With information from Bloomberg