Brazil-Argentina gas deal eyes lower prices

Market: Natural gas
25/11/24

The bilateral natural gas agreement that Brazil and Argentina signed during the 18-19 November G20 summit aims to enhance trade and make Brazilian domestic prices more competitive with more supply, overcoming political challenges between the two nations.

The deal, which can increase gas flows from Argentina to Brazil from 9.3mn m³/d up to 30mn m³/d in the next five years, aims to lower natural gas prices in Brazil. So far, Argentina has approved 9.3mn m³/d of gas to be exported to Brazil, all with interruptible deliveries.

These contracts, featuring fixed prices ranging from $6.49-9.25/mmBtu, have yet to reshape the natural gas market dynamics in the region. The lowest price is 40pc lower than the Argus' Natural gas Brazil network average daily prices, which sits over $11.20/mmBtu, including transport tariffs.

Four out of the eight Argentinian clearances to export gas to Brazil belong to TotalEnergies. The first two were approved at the end of July, for 2mn m³/d, to be traded by TotalEnergies' Brazilian subsidiary Matrix Energy. Another 3mn m³/d took effect 7 November between Matrix and Mgas trading, based in Rio de Janeiro.

Half of this volume is from Vaca Muerta formation in Argentina's Neuquen region. The other half comes from the southern Patagonia region.

Gas prices on the Brazil-Argentina border were set higher by the companies that requested permission in November's contracts, fixed at $9.25/mmBtu at the border compared with $9.18/mnBtu in July. That is the highest price set on the border so far.

Argentina-based Pan American Energy (PAE) set the lowest prices on the frontier so far in two different authorizations. In June, a small contract of 300,000 m³/d with Brazilian Tradener, set at $6.66/mmBtu at the border. In August, PAE set prices at $6.49/mmbtU for more 500,000 m³/d with its own subsidiary in Brazil.

The highest volume cleared so far was 2mn m³/d in August to Argentina's Pluspetrol. It will export to Gas Bridge Comercializadora, its Brazilian subsidiary. The contract is valid until 1 January 2028, the largest of these deals and the only one not at a fixed price. Instead, it foresees fees at 8pc above the Brent crude market/mmBtu.

Tecpetrol, the fourth-largest gas producer in Argentina, will export another 1.5mn m³/d to Mgas using one of the first licenses to export from its main project in Vaca Muerta, where its reserves are concentrated.

By Betina Moura

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24/12/24

Viewpoint: California dairy fight spills into 2025

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23/12/24

Viewpoint: US LPG cargo premiums poised to fall

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23/12/24

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23/12/24

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23/12/24

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20/12/24

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