Vaca Muerta-Brazil Pipeline

From Global Energy Monitor

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The Vaca Muerta–Brazil Pipeline, alternatively known as the Gasoducto AF–CFK, is a proposed gas pipeline in Argentina and Brazil.

Location

The pipeline would consist of three sections:

  • The initial 980-kilometer section would run from Tratayén in the Vaca Muerta shale fields (Neuquén province) to San Jerónimo in Santa Fe province, Argentina.
  • The second 450-kilometer section would run from San Jeronimo to the AES Uruguaiana power plant in Uruguaiana, Brazil, just east of the Argentina-Brazil border.
  • The remaining section, known in Brazil as the Gasoduto Uruguaiana-Porto Alegre, would run 625 kilometers through the Brazilian state of Rio Grande do Sul, traveling from Uruguaiana through the municipalities of Alegrete, Santa Maria and Santa Cruz do Sul to the Triunfo Petrochemical Complex and the Alberto Pasqualini refinery outside the state capital of Porto Alegre.[1]
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Project Details

  • Owner:
  • Proposed capacity: 100 MMcm/d (3531 MMcf/d)[2]
    • Phase 1 (Tratayén to San Jerónimo): 40 MMcm/d[1]
    • Phase 2 (San Jerónimo to Uruguaiana): 30 MMcm/d[1]
    • Phase 3 (Uruguaiana to Porto Alegre): 30 MMcm/d[1]
  • Length: 2055 km / 1277 miles[1]
    • Phase 1 (Tratayén to San Jerónimo): 980 km[1]
    • Phase 2 (San Jerónimo to Uruguaiana): 450 km[1]
    • Phase 3 (Uruguaiana to Porto Alegre): 625 km[1]
  • Status: Proposed
  • Start Year: 2024[3]

Background

The Vaca Muerta–Brazil Pipeline would transport natural gas from Argentina's Vaca Muerta shale fields to Porto Alegre, Brazil, crossing the Argentina-Brazil border near the city of Uruguaiana.[2]

Interest in an Argentina-Brazil gas pipeline dates back to the early 2000s. In 2009, Brazil's government officially approved development of the Brazilian section of pipeline between Uruguaiana and Porto Alegre, but the project was ultimately shelved due to Argentina's decision to allocate its gas reserves for domestic consumption rather than export. However, with the recent discovery of Vaca Muerta's extensive unconventional natural gas reserves, the project has regained momentum.[4]

Current impetus for the project is driven by Brazil's desire for less expensive natural gas and Argentina's interest in finding new markets for Vaca Muerta's energy assets.[5] According to Argentina's ambassador to Brazil, Daniel Scioli, several parties have expressed interest in developing the project, including private Argentine construction companies, Argentina's two largest oil companies, and an international development agency.[3]

The proposed international pipeline was included in Argentina's July 2020 draft five-year energy plan as an alternative to Argentina's Vaca Muerta Pipeline System, which had been abandoned earlier the same month due to ongoing credit market challenges posed by Covid-19, the collapse of international oil prices, and Argentina's high country risk rating.[1]

Argentine and Brazilian officials have met on multiple occasions to discuss the proposed pipeline. Guillermo Nielsen, president of the Argentine energy company YPF, met with Brazilian Economy Minister Paulo Guedes at the Davos Forum in Switzerland in January 2020[5], while Brazilian Mining & Energy Minister Bento Albuquerque held two separate meetings concerning the project with Argentina's ambassador to Brazil Daniel Scioli and Argentine Energy Secretary Darío Martínez in September 2020.[6]

The construction time frame for the entire project is estimated at three years minimum, with an approximate total cost of US$5 billion.[3][7]

Press reports indicate that the Brazilian section of the pipeline, running roughly 600 kilometers from Uruguaiana to Porto Alegre, would cost an estimated R$ 4.6 billion (approximately US$ 1.2 billion)[4][8] and take 18 months to build, with its initial capacity of 15 MMcm/d eventually increasing to 30 MMcm/d.[6] The Brazilian section of the pipeline would be operated by Transportadora Sulbrasileira de Gás (TSB)[4], with possible financing from CAF Latin American Development Bank.[9] Costs for the 1430-kilometer Argentine section of the pipeline are estimated at approximately US$ 3.7 billion.[8]

Significant obstacles to the pipeline's development remain, including financing challenges on both sides of the border, lack of interest from Petrobras (Brazil's state-owned oil company), potentially insufficient Brazilian demand, and Brazil's ability to obtain natural gas from other sources, including Bolivia and the country's own offshore gas fields.[6][8] Décio Oddone, head of Brazil's national energy regulatory agency ANP, has stated that Brazil should prioritize gas imports in the form of LNG over the construction of new pipelines.[10] Documents cited in Argentina's July 2020 draft five-year energy plan also question the project's viability, noting that Argentine gas may become less attractive from a cost perspective within the time frame required for completion of the project.[1]

Articles and resources

References

  1. 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 "Nación proyecta un gasoducto "AF - CFK" para Vaca Muerta". Diario Río Negro. July 24, 2020.
  2. 2.0 2.1 "Argentina halts Vaca Muerta gas pipeline project". Kallanish Energy News. July 16, 2020.
  3. 3.0 3.1 3.2 "De Vaca Muerta a Brasil: un proyecto de u$s5.000 millones". Ámbito. September 21, 2020.
  4. 4.0 4.1 4.2 "Projeto de gasoduto Uruguaiana-Porto Alegre volta a ganhar força". Jornal do Comércio. January 1, 2020.
  5. 5.0 5.1 "Argentina acelera gestiones para un nuevo gasoducto entre Vaca Muerta y Brasil". El Cronista. September 14, 2020.
  6. 6.0 6.1 6.2 "Argentina busca seguir adelante con planes de gasoducto Vaca Muerta-Brasil". BNamericas. October 1, 2020.
  7. "El gasoducto de Vaca Muerta a Brasil, un proyecto de $s5.000 millones". Vaca Muerta News. September 22, 2020.
  8. 8.0 8.1 8.2 "A Complicated Major Gas Pipeline System on the Drawing Boards in South America". Pipeline Technology Journal. September 18, 2020.
  9. "Rio Grande do Sul busca financiamento para gasoduto". EPBR. August 23, 2019.
  10. "Brazil prepares for a new phase of investments in LNG terminals". LNG Latin America & the Caribbean. Retrieved 2021-04-17.

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External resources

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