El Niño Could Boost Argentina Gas Exports to Brazil, OLACDE Says

Changing weather patterns may reshape South American gas flows, creating new opportunities for Argentine exports and regional pipeline development.

(Reuters) — Argentina's natural gas sales to Brazil could increase during the Southern Hemisphere's spring due to the El Niño weather phenomenon, a representative of the Latin American and Caribbean Energy Organization (OLACDE) told Reuters.

An intense El Niño would increase the frequency and intensity of rainfall in Argentina, allowing greater use of hydroelectric plants. In western Brazil, however, the phenomenon would cause drought, requiring more natural gas to generate electricity in thermal power plants.

"Brazil is likely to have greater need for natural gas, and Argentina, because of how (El Niño) affects the Paraná (River), may have exportable surpluses," Guido Maiulini, head of strategic advising, told Reuters on June 19.

OLACDE is a regional organization of 27 countries.

Maiulini did not estimate how much gas sales — currently conducted ad hoc — could increase. Last year, Argentina, for the first time, exported gas from its Vaca Muerta shale formation to Brazil via Bolivian pipelines.

Regional Gas Market

Argentina is developing Vaca Muerta in the west of the country, which holds the world's second-largest unconventional gas reserves and fourth-largest oil reserves.

Greater regional gas integration is possible, according to OLACDE, due to Vaca Muerta's unconventional resources and unmet demand in some markets.

But expanding regional trade could require $18 billion in infrastructure investment in Brazil, Uruguay, Paraguay, Chile, Bolivia and Argentina, OLACDE estimates. This includes a gas pipeline from the Argentine province of Santa Fe to Brazil's Porto Alegre and modifications to a pipeline from Argentina to Bolivia.

Argentina is negotiating new gas export agreements with Brazil using pipelines in Bolivia, said Maiulini.