Argentina faces a potential shortage of herbal fuel in the winter of 2021 if production continues to decline, which can lead to increased imports of fuel alone and even diesel, Mavens said.
Argentina, which consumes an average of 140 million m3/d, increased its fuel imports from 0 to a maximum of 32 million m3/d in 2017 after production began to fall in 2004 to a 16-year low of 113. 7 million m3/d in 2014. Imports fell to 18. 8 million m3/d in 2019 with the resumption of production, driven by the progression of Vaca Muerta, a massive game in Patagonia that contains some of the world’s largest shale fuel resources.
This year, however, imports averaged 21. 6 million m3/d in the first 8 months of the year. And if it hadn’t been for a blockade of the economy because of the coronavirus pandemic, which led the country to one of its most internal recessions recorded, then imports would probably have been even higher this year, Aranguren said.
Call for incentives
To rebuild fuel production, Aranguren said the government put in place incentives to inspire new drilling in Vaca Muerta, as well as in traditional and narrow areas.
In August, the government announced that it was preparing a 2020-24 program for the reconstruction of fuel production, adding the creation of an auction formula for long-term source contracts. Producers will be able to sell fuel for delivery in 4 years – 8 years from high seas fuel projects: to market costs to be decided at auctions, which will help them plan investments to increase production.
On October 1, Economy Minister Martín Guzmán, who oversees energy issues, said the program to reduce fuel and diesel imports was imminent, but each and every day of delay results in fears that the opposite may happen as a source of the widening deficit.
“Right now, we’re faced again with the closeness of wanting to start loading herbal fuel or, alternatively, diesel,” José Luis Sureda, an oil industry veteran and former national hydrocarbon resources secretary, said at the summit.
This is a sharp change in expectations that Vaca Muerta would turn the country into a global fuel exporter. In fact, the currency allowed fuel exports to reach 5. 5 million m3/d in 2018 versus 1 million m3/d in 2017, according to the knowledge of the Energy Secretariat. Exports, however, fell to 4. 6 million m3/d in 2019 and to an average of 4. 4 million m3/d in the first 8 months of 2020.
There is a sense of urgency in increasing imports. The country is in a third year of currency crisis, leading to a decline in dollar reserves that may limit its ability to pay for fuel imports, said Sergio Berensztein, an analyst politician in Buenos Aires.
Regulatory stability
To invest in expanding fuel production and then on Vaca Muerta’s exports, Sean Rooney, who runs Shell’s operations in Argentina, said something key in regulatory stability.