The South American Natural Gas Market. Raul Bertero Universidad de Buenos Aires

(1)

Raul Bertero

Universidad de Buenos Aires

The South American Natural Gas

Market

(2)

The South American Natural Gas Market

¾

Southern

Cone

situation

before

2004

¾

2004 Argentina Crisis

¾

Future

of

the

Natural Gas in

the

Southern

Cone

(3)

Southern

(4)

Montevideo Buenos Aires Uruguaiana San Pablo Porto Alegre Punta Arenas Suárez

Santa Cruz BRAZIL

CHILE BOLIVIA URUGUAY PERÚ Lima C.Austral C.San Jorge C. Santos C. Noroeste C. Bolivia Camisea

3

4

5

9

5

32

44

16

12

5

9

AVERAGE NATURAL GAS DEMAND (MMm3/d) 2004 INTERNAL DEMAND INTERNAL DEMAND (MMm3/d) ARGENITNA 96 ARGENITNA 96 BRASIL BRASIL 3737 CHILE 19 CHILE 19 BOLIVIA 4 BOLIVIA 4 PERU 3 PERU 3 URUGUAY 1 URUGUAY 1

(5)

AVERAGE NATURAL GAS DELIVERED BY BASIN (MMm3/d) 2004 Montevideo Buenos Aires Uruguaiana San Pablo Porto Alegre Punta Arenas Suárez

CHILE BOLIVIA URUGUAY PERÚ Lima C.Austral C.San Jorge C.Neuquen C. Santos/Campos C. Noroeste C. Bolivia Camisea

3

12

37

15

61

5

(6)

CHILE BOLIVIA URUGUAY PERÚ Lima

27

8

6

12

3

5

19

20

32

5

4

16

2

1

AVERAGE FLOW (MMm3/d) 2004

19

EXPORTS EXPORTS (MMm3/d) BOLIVIA 31 BOLIVIA 31 ARGENTINA 22 ARGENTINA 22 TOTAL 53 TOTAL 53 (33% OF THE TOTAL (33% OF THE TOTAL DEMAND) DEMAND)

(7)

PROVEN RESERVES (BCM) 2004 Montevideo Buenos Aires Uruguaiana San Pablo Porto Alegre Punta Arenas Suárez

CHILE BOLIVIA URUGUAY PERÚ Lima C.Austral C.San Jorge C.Neuquen C. Santos/Campo C. Noroeste C. Bolivia Camisea

308

321

782

93

345

37

132

CHILE BOLIVIA URUGUAY PERÚ Lima C.Austral C.San Jorge C.Neuquen C. Santos/Campos C. Noroeste C. Bolivia Camisea

3

12

37

15

61

5

24

AVERAGE NATURAL GAS DELIVERED BY BASIN (MMm3/d) 2004

ARGENTINA BASINS ARE

MATURE WITH ABOUT 10

YEARS

(8)

Argentina

wellhead

prices

PRECIOS PROMEDIO DE CUENCA

0,00 0,20 0,40 0,60 0,80 1,00 1,20 1,40 1,60 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 U$S/MMBTU

NEUQUINA AUSTRAL NOROESTE

Production

Production costcostofof

Nequina

(9)

Oil and Gas Exploration wells in Argentina

1960/2005

POZOS DE EXPLORACION EN ARGENTINA - 1960/2005

0 20 40 60 80 100 120 140 160 180 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004

Argentina

Economical

Crisis

Privatization of YPF Repsol buys YPF

(10)

SOUTHER CONE NATURAL GAS 2003

¾

Apparently no concern about supply

¾

Argentina issued an export permit to Chile

from

(11)

Argentina crisis

-

2004

¾

Brief Description of the Argentina System

¾

Crisis reasons

¾

Measures taken by the Argentine Government

¾

(12)

Montevideo Rosario Belo Horizonte PORTO ALEGRE

AÑO 2004

(MMm3/d)

16,2 39,4 31,9 7,1 15,7 Santiago Buenos Aires Bahia Blanca 10 La Paz 22,5 18,7 41.2 36 16,3 4 5 14,9 Rio De Janeiro Sao Paulo Santa Cruz Concepcion 2,8 1 3,5 2

Argentina Natural Gas

System

Transportation Capacity

120 MMm3/d

Average flow at crisis

1

(13)

Argentina Seasonality

Consumo de Gas Natural (promedio mensual)

20 40 60 80 100 120 140 MM3 /d ía GNC INDUSTRIA EXPORT USINAS RESID. COM.

(14)

Argentina Natural Gas Demand

Demanda del año 2003

0 20 40 60 80 100 120 140 160

Promedio Año Pico invernal

MMm3/día RESIDENCIAL GNC INDUSTRIAS USINAS RESIDENCIAL GNC INDUSTRIAS USINAS CAPACIDAD DE TRANSPORTE EXPORTACION EXPORTACION

(15)

Argentina Natural Gas mechanism to manage

seasonality (no storage)

Demanda

cortes

Demanda

cortes

Capacidad Firme Contratada

DISTRIB. MM m3/dia 0 5 10 15 20 25 30 35 40

ENERO JUN/JUL DIC

Capacidad Firme Contratada

DISTRIB. MM m3/dia 0 5 10 15 20 25 30 35 40

ENERO JUN/JUL DIC

DISTRIB. MM m3/dia 0 5 10 15 20 25 30 35 40

ENERO JUN/JUL DIC

MM m3/dia 0 5 10 15 20 25 30 35 40 MM m3/dia 0 5 10 15 20 25 30 35 40

(16)

Total

injections

in

the

transportation

system

INYECCION TOTAL DE GAS EN EL SISTEMA DE TRANSPORTE

40 50 60 70 80 90 100 110 120 130

1-Jan 1-Feb 3-Mar 3-Apr 4-May 4-Jun 5-Jul 5-Aug 5-Sep 6-Oct 6-Nov 7-Dec

MMM3/día 2000 2001 2002 2003 1999 2004 CAPACIDAD DE TRANSPORTE FALTA DE CAPACIDAD DE PRODUCCIÓN

(17)

Crisis

reasons

Consumo de Gas Natural (promedio mensual)

0 20 40 60 80 100 120 140

Ene/1993 Ene/1994 Ene/1995 Ene/1996 Ene/1997 Ene/1998 Ene/1999 Ene/2000 Ene/2001 Ene/2002 Ene/2003 Ene/2004

MM3 /día GNC INDUSTRIA EXPORT USINAS RESID. COM. In

In thethesummersummerofof 2004

2004 thethe demanddemand increased

increased

20

20 MMm3MMm3/d /d with

with respectrespect totothethe previous

previous yearyear

(25 %

(18)

Argentina

Power

Generation

GENERACION DE ENERGIA ELECTRICA

0 1000 2000 3000 4000 5000 6000 7000 8000 Jan-9 8 Mar-98May -98 Jul-9 8 Sep-9 8 Nov -98 Jan-9 9 Mar-99May -99 Jul-9 9 Sep-99No v-99 Jan-0 0 Mar-00May -00 Jul-00_Sep-00_Nov-00_Jan-0 1 M ar-01 May -01 Jul-01_Sep-01_Nov-01_Jan-0 2 Mar-0 2 May -02 Jul-02_Sep-02_Nov-02_Jan-0 3 Mar-0 3 May-0 3 Jul-03_Sep-03_Nov-03_Jan-0 4 GWh NUCLEAR HIDRO TERMICA IMPORTAC

(19)

Thermal Power Plants demand

CONSUMO DE COMBUSTIBLE PARA CENTRALES TERMICAS (Mm3/d de GN equivalente)

0 5000 10000 15000 20000 25000 30000 35000 40000 -98 -98 -98 98 98 99 -99 l-99 99 99 00 -00 00 -00 00 -00 -01 -01 -01 l-01 01 01 02 02 02 02 -02 03 -03 -03 -03 03 -03 04 GAS NATURAL FO CARBON

(20)

2004 Increase of Demand

¾

Industrial 4

MMm3/d

¾

Exports

4 MMm3/d

¾

GNC

2 MMm3/d

¾

Power Plants

• Energy demand growth

2 MMm3/d

• Low Hydro conditions

8 MMm3/d

(21)

Measures taken by the Argentine Government

Actions on demand

1. Export restrictions

2. Fuel-oil acquisition (240 MMu$s)

3. Energy saving program

Actions on supply

1. Agreement between Government and Producers on price path and target production volumes

2. Restart natural gas imports from Bolivia. (4 MMm3/día -1.60 u$s/MMBTU)

2004

(22)

Export

restrictions

to

Chile

EXPORTACIONES DE GAS POR CUENCA Y RESTRICCIONES

0 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 30,000,000 Jul-04Au g-04 Sep-04Oct-04Nov-04Dec-04Ja n-05 Feb-0 5 Mar -05 Apr-05_May-05Jun-05Jul-0 5 Au g-05 Se p-05 Oct -05 Nov-05Dec-0 5 Jan-06Fe b-06 Mar -06 Apr-06_May-06Jun -06 AUSTRAL NORTE NEUQUEN RESTRICCIONES

(23)

Exports

to

Uruguayana

Power

Plant

in Brasil

Exportacion Uruguayana (Brasil)

0 500 1,000 1,500 2,000 2,500 3,000 -04 _b-04 _r-04 _r-04 _n-04 l-04 _g-04 _p-04 v-04 -04 -05 r-05 n-05 5 g-05 p-05 t-05 -05 -06 6 r-06 y-06 n-06 6 Mm3/d

winter

(24)

Fuel

-

Oil

Acquisition

¾

¾ Fiscal cost of 300 Fiscal cost of 300 millones

millones de US$de US$

¾

¾ There is a limit for There is a limit for switching natural gas

switching natural gas

to fuel

to fuel--oil because oil because storage, logistic and

storage, logistic and

dual power plants

facilities of about 16 facilities of about 16 MMm3/d equivalent MMm3/d equivalent natural gas natural gas

CONSUMO DE COMBUSTIBLE PARA CENTRALES TERMICAS (Mm3/d de GN equivalente)

0 5000 10000 15000 20000 25000 30000 35000 40000 Ma r-98 May -98 Ju l-98 Se p-98 No v-98 Ja n-99 Ma r-99 May -99 Ju l-99 Se p-99 No v-99 Jan -0 0 Ma r-00 May -00 Ju l-0 0 Se p-0 0 No v-00 Ja n-01 Ma r-01 May -01 Ju l-01 Se p-01 No v-0 1 Ja n-02 Ma r-02 Ma y-0 2 Ju l-02 Se p -02 No v-02 Ja n-03 Ma r-03 May -03 Ju l-0 3 Se p-03 No v-03 Ja n-04 Ma r-04 May -04 Ju l-04 Se p-04 GAS NATURAL FO CARBON

(25)

Energy

saving

program

¾

¾ No No significantsignificant effectseffects onon the

the residentialresidential demanddemand pattern

pattern

¾

¾ TheThe incentives incentives andand penalties

penalties werewere too too lowlow toto be be effectiveeffective Consumo Residencial 2003/2004 0 5000 10000 15000 20000 25000 30000 35000 40000

Ene Feb Mar Abr May Jun Jul Ago

Mm 3/ d 0 50 100 150 200 250 300 DG D 2003 2004 2004 2003

(26)

Natural Gas

Prices

of

Neuquina

Basin

for

Large

Users

in Argentina

PRECIO DE GAS NATURAL EN LA CUENCA NEUQUINA GRANDES USUARIOS ARGENTINA (U$S/MMbtu)

-0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 julio -199 7 di c-1997 julio -199 8 di c-1998 julio -199 9 di c-1999 julio -200 0 di c-2000 ju lio-2001 di c-2001 julio -200 2 di c-2002 julio -200 3 di c-2003 julio -200 4 di c-2004 julio -200 5 di c-2005 ju lio-2006 di c-2006 U$S /MMbt u SENDERO DE PRECIOS LIBERACION DE PRECIOS ACUERDO PPI

(27)

Agreement

with

producers

and

Bolivia

imports

¾ The established volumes were not enough to fill the transportation capacity and therefore the

exports restrictions continue

Producción Neta total

0 20 40 60 80 100 120 140 160 Jan-03 Feb-03 Mar-03 Apr-03 May-03 Jun-03 Jul-03 Aug-03 Sep-03 Oct-03 Nov-03 Dec-03 Jan-04 Feb-04 Mar-04 Apr-04 May-04 Jun-04 Jul-04 Aug-04 Sep-04 MMm 3/ d IMPORTACIONES DE BOLIVIA

PRODUCCION DE CUENCAS ARGENTINAS FUEL OIL PARA USINAS

(28)

Imports from Bolivia

Importación de Bolivia 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 Jan -04 Fe b-04 Mar-0 4 Apr -04 May-04Ju n-04 Jul-04_Aug-0 4 Sep-04Oct-04No v-04 Dec -04 Jan -05 Fe b-05 Mar-05Apr-0 5 May-05Jun-0 5 Jul-05Aug-05Se p-05 Oct-05 Nov-05 De c-05 Jan -06 Fe b-06 Mar-0 6 Apr -06 May-0 6 Ju n-06 Jul-0 6 Mm3/d

(29)

2004 Crisis

Summary

Demanda mensual 2003-2004 promedio diario

-20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 Ene/ 200 3

Feb Mar Abr May Jun Jul _Ago _Sep _{Oct No}v Dic Ene/2

004 Feb Mar Abr May Jun Jul Ago Sep

Mm3 /d ia RESIDENCIAL INDUSTRIAL GENERACIÓN GNC EXPORTACION CORTES A USINAS CORTES A INDUSTRIAS CORTES A EXPORTACIONES Total demand increase 25% mainly due to hydro conditions Total deliverability could not afford it

Export restrictions and Fuel oil

supplies manage the crisis

(30)

2004 Argentina Crisis Questions

¾

Was it a transportation, reserves or deliverability

shortage?

¾

Was

it

only

a

price

problem

?

¾

Is

it

over

?

¾

What

are

the

lessons

for

the

future

of

the

Southern

Cone

(31)

Was it a transportation, reserves or

deliverability shortage?

INYECCION TOTAL DE GAS EN EL SISTEMA DE TRANSPORTE

40 50 60 70 80 90 100 110 120 130

1-Jan 1-Feb 3-Mar 3-Apr 4-May 4-Jun 5-Jul 5-Aug 5-Sep 6-Oct 6-Nov 7-Dec

MMM3/día 2000 2001 2002 2003 1999 2004 CAPACIDAD DE TRANSPORTE FALTA DE CAPACIDAD DE PRODUCCIÓN

It

(32)

Was

it

only

a

price

problem

?

¾ Loma de la Lata Field (Neuquen) represents 25 % of the total Natural Gas Production of Argentina

¾ Apparently the declination of this mega-field expected by 2011 has already started

¾ With more investments the Argentina reserves could increase but could be very difficult to increase significantly the deliverability in Neuquina Basin

(33)

Is

the

crisis

over

?

Generación hidráulica 2004-2006 -5 10 15 20 25 30 35 90 % de probabilidad de ser superada 10 % de probabilidad de ser superada Hidraulicidad baja Hidraulicidad alta

Since June 2005 the Hydro conditions have been high (only 10% probabiltiy of be overpassed)

The difference

between low and high hydro condition

represents

(34)

Is

the

crisis

over

?

Pronóstico de producción de Gas Natural informado por los productores a la SE (2005/2009) -20,000 40,000 60,000 80,000 100,000 120,000 140,000 Jul-0 5 Se p-05 No v-05 Ja n-06 Mar -06 May-06Jul-0 6 Sep -06 No v-06 Jan -07 Mar -07 May-07Jul -07 Sep -07 No v-07 Jan -08 Mar -08 May-08Jul -08 Se p-08 Nov-08Jan-09Mar -09 May-09Jul-0 9 Sep -09 Nov-09 Mm3 /d AUSTRAL NEUQUEN NOROESTE S. JORGE

Producers inform to the Argentina Secretary of Energy the following evolution of the produccion 2009/2005 Austral ... + 5.3 % S. Jorge ... – 37.9 % Neuquen ... – 23.5 % Noroeste ... – 6.6 %

(35)

Argentina Crisis Lessons

¾

Deliverability is more important than reserves in order

to consider the sustainability of exports

¾

It can not be expected that any country export a non

renewable natural resource that is not enough for the

internal market

(36)

Future

of

the

Natural Gas in

the

Southern

Cone

¾

Demand

and

supply

2015

¾

Expected

shortage

of

natural gas

¾

Alternative

projects

¾

(37)

15

14

6

11

9

85

68

23

18

15

14

AVERAGE NATURAL GAS DEMAND (MMm3/d) 2015 INTERNAL DEMAND INTERNAL DEMAND (MMm3/d) ARGENITNA 150 ARGENITNA 150 BRASIL BRASIL 100100 CHILE 26 CHILE 26 BOLIVIA 14 BOLIVIA 14 PERU PERU 1515 URUGUAY 3 URUGUAY 3

(38)

AVERAGE NATURAL GAS

DEMAND (MMm3/d) 2015 PEAK DELIVERABILITY -_(MMm3/d)

2015

15

14

6

11

9

85

68

23

18

15

14

CHILE BOLIVIA URUGUAY PERÚ Lima C.Austral C.San Jorge C.Neuquen C. Santos/Campos C. Bolivia Camisea

53

83

160

17

56

5

40 LNG

LNG

12

17.7

Bolivia deliverability will hardly reach 80 MMm3/d

(39)

The Southern Cone shortage will be about 100

MMm3/d of Natural Gas

¾

Red de Gasoductos del Sur (Basically Gas from Peru

to Chile and from Bolivia to Argentina and South of

Brasil)

¾

Gran Gasoducto del Sur (Gas

from

Venezuela)

¾

(40)

Red de Gasoductos del Sur

Alternativa TRAZA 1 – Antofagasta 1700 km PERÚ ARGENTINA CHILE BOLIVIA BRASIL Montevideo Cuiabá San Pablo Porto Alegre Rio Grande Colonia Asunción Uruguayana Paysandú Tarija Rosario Santiago C. Neuquina Campo Durán Buenos Aires Camisea Lima Antofagasta Mejillones Pisco Tocopilla

Gasoductos existentes a ser ampliados o utilizados por la Red

Gasoductos nuevos que formarán parte de la Red

(41)

Montevideo Buenos Aires San Pablo Porto Alegre Punta Arenas Suárez

30

6

33

24

20

16

98

13

3

Lima

LNG

12

17.7

17.7 LNG

LNG

13

16

90

5

10

83

AVERAGE FLOW (MMm3/d) 2015

(42)

Gran

Gasoducto

del

Sur

782 4219

308

321

287

97

PROVEN RESERVES (BCM) 2004

(43)

35 10 50 50 50 5

(44)

50 50 15 5 120 50 50

(45)

75 50 15 5 150 50 50 5

(46)

Montevideo Buenos Aires San Pablo Porto Alegre Punta Arenas Suárez

30

6

33

24

20

16

9

13

3

Lima

LNG

12

17.7

17.7 LNG

LNG

13

90

5

10 LNG

LNG

(47)

Conclusions

¾

In 2015 the Southern Cone shortage will be about 100 MMm3/d of

Natural Gas

¾

The Venezuela Pipeline and LNG will compete for this market

¾

Venezuela Pipeline

• Investment Costs and Financing: Who Will Pay?

¾

LNG

• Cheap energy was considered the competitive advantage of the

region. International LNG prices do not neutralizes such

(48)

The South American Natural Gas

Market

End

(49)

782 4219

308

321

132

287

97 _RESERVAS

PROBADAS

(MM3/d)

2004

(50)

Situac

ión de la Producción y Transporte

de Gas

¾

(51)

Evolución de la capacidad de transporte en los 90

E V O L U C I O N D E L A C A P A C I D A D D E T R A N S P O R T E 0 2 0 4 0 6 0 8 0 1 0 0 1 2 0 1 4 0 1 6 0 1 8 0 1 9 9 3 1 9 9 4 1 9 9 5 1 9 9 6 1 9 9 7 1 9 9 8 1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 MM m 3 /d 5 0 M M m 3 / d P a r a l i z a c i ó n E x p a n s i o n e s

(52)

Situación en el 2003

SITUACION EN 2003 0.00 20.00 40.00 60.00 80.00 100.00 120.00 140.00 160.00 180.00 MMm3/dia CAPACIDAD DE TRANSPORTE INDUSTRIA GNC EXPORT RESIDENCIAL

Días de cortes de servicio

(53)

Situación en el 2004

SITUACION EN 2004 0.00 20.00 40.00 60.00 80.00 100.00 120.00 140.00 160.00 180.00

Enero Febrero Marzo Abril Mayo Junio Julio Agosto Septiembre Octubre Noviemb Diciemb

MMm3/dia CAPACIDAD DE TRANSPORTE INDUSTRIA GNC EXPORTACION RESIDENCIAL

Días de cortes de servicio

(54)

Situac

ión de la Producción y Transporte

de Gas

¾

(55)

Natural Gas Balance

-

Argentina

Balance de la Demanda de Gas Natural Demanda Alta (E2)

-50,000 100,000 150,000 200,000 250,000 04 05 6 7 09 0 1 2 3 4 5 16 7 8 19 20 1 23 24 Mm 3/ d _{IMPORTACIONES} PRODUCCION NACIONAL EXP.

(56)

INYECCIÓN POR

CUENCA PEAK

(MM3/d)

2015

CHILE BOLIVIA URUGUAY PERÚ Lima C.Austral C.San Jorge C.Neuquen C. Santos/Campos C. Bolivia Camisea