Argentina Starts Gas Exports To Brazil Through Bolivia

For the first time, Argentina has exported gas from its Vaca Muerta shale formation to Brazil via a system of Bolivian pipelines, following an agreement between TotalEnergies (TTEF.PA), Bolivia's YPFB, and Matrix Energia, as announced by the Brazilian firm on Tuesday. Firms from Bolivia, Argentina, and Brazil have been negotiating agreements for more than a year, aiming to establish a permanent pathway for Argentina's gas to access one of Latin America's key gas markets, Brazil. Approximately 500,000 cubic meters were shipped via the Bolivian pipeline on Tuesday, according to sources knowledgeable about the situation.

"Matrix stated in a message that the aim of the extraordinary operation is to guarantee the technical feasibility of the logistics network. Agreements were established between Total's Argentina division and Matrix, as well as between Bolivia's state-owned YPFB and Matrix for a collaborative operational deal. A significant obstacle was Bolivia's early unwillingness to impose a toll for utilising its infrastructure, favoring an approach where it would purchase gas from Argentina and subsequently resell it to Brazil. However, in recent months, negotiations have gotten better, with multiple potential supply contracts recognised," sources informed Reuters.

Argentina exports gas to Brazil

For years, the pipeline has transported essential supplies of Bolivian gas to Brazil and Argentina; however, as Bolivia's gas production declines, exports have decreased, necessitating new suppliers and transport alternatives. The entry of Vaca Muerta gas into Brazil is a victory for President Luiz Inacio Lula da Silva, who has prioritised supplying cheaper gas to the nation's industry. If exports remain steady, they would signify a victory for Argentina, where gas production is increasing due to President Javier Milei's pro-market strategies, creating a new revenue stream for a nation that had, until recently, been facing an energy trade deficit.

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The deal contains a spot contract, allowing Brazil's supply to be halted in winter when Argentina's demand peaks, one source informed Reuters. YPFB of Bolivia did not provide an immediate response to a Reuters inquiry for comment. Brazil's oil behemoth Petrobras (PETR4.SA), opens new tab, is exploring contracts to import liquefied natural gas (LNG) in the next few years while also negotiating pipeline supplies from Argentina, according to a company executive last month. "I believe there is a genuine opportunity to reach an agreement," stated Mauricio Tolmasquim, former head of energy transition at Petrobras, mentioning discussions to obtain Argentine gas via Bolivia. "We are discussing the price that would be acceptable to the majority of parties," he stated.