Argentina secures six LNG cargoes, allays fears of natgas cuts

08 May 2012 22:00  [Source: ICIS news]

HOUSTON (ICIS)--Argentina’s LNG incumbent buyer ENARSA has secured six liquefied natural gas (LNG) cargoes over the southern hemisphere winter season that will help alleviate natural-gas-shortage worries after the Argentine company paid an average price of $17.00/MMBtu, a source in the country said on Tuesday.

Argentina faces shortages in natural gas every winter. To maintain enough supplies for residential heating, it cuts supplies to petrochemical companies and other industrial users.

Already, a cold spell has disrupted natural gas supplies to industrial users, ranging from steel mills to petrochemical and fertilizer producers.

The speed of ENARSA’s procurement comes as the peak winter heating season looms and the country is still uncertain about the reliability of receiving six contracted cargoes from Spain’s Repsol over the next few months.

“We wanted to move quickly,” the source in Argentina said. “We had the option to go directly to the suppliers. It’s like a mini tender.”

Argentina’s ENARSA is mandated to secure LNG imports through a tender process.

Italy’s Eni will provide three of the cargoes to Bahia Blanca and will be delivered in July and August. The volumes will likely be reloaded from the company’s position at the Zeebrugge terminal in Belgium, sources said.

Another two Bahia Blanca slots were filled by UK-based BP, which will deliver one in July and another in August, the source said.

The first offtaker of regasified LNG at Bahia Blanca is the Mega petrochemical plant that produces ethylene and propylene. Mega is a joint venture between YPF (38%), Brazil’s Petrobras (34%) and US Dow Chemical (28%).

The last of the six cargoes for ENARSA was closed with Petrobras, which sent the 126,000 cubic metre LNG Capricorn to ENARSA’s Escobar terminal over the weekend and has already discharged. This cargo was sourced at a price level under the $17.00/MMBtu level, which ENARSA paid above for the Bahia Blanca cargoes, the source said.

“The market levels were up after having secured the majority of the supply for the winter at $13.00 [/MMBtu],” the source in Argentina said. “We know that the market is not at those levels anymore.”

In comparison, the US NYMEX Henry Hub natural gas futures contract settled on Tuesday at $2.39/MMBtu.

The five cargoes for Bahia Blanca only covers ENARSA’s needs that remained outstanding from the previous tenders, which left two slots open in May, one in July and another in August.

The source in Argentina said that ENARSA has not received formal notice from Spain’s Repsol regarding the delivery of six cargoes – two in each month from June to August - in the aftermath of Argentina’s nationalisation of YPF.

ENARSA continues to talk with sellers about future supplies, including US-based trader Excelerate Energy and US investment bank Morgan Stanley as some winter volumes could still be needed.

Additional reporting by George Martin

By: Ryan Hickman
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