Companies shuffle for third Argentine LNG FSRU

12 July 2017 11:54 Source:ICIS

A number of competing proposals are in place to develop a third Argentina floating LNG import terminal for Buenos Aires.

State-run producer YPF has looked to develop its own floating storage regasification unit (FSRU) in Buenos Aires, with a possible charter agreement of up to 15 years, but it is unclear whether YPF would take on project development on its own.

A tender was launched earlier in 2017 for the provision of an FSRU, but a final decision has not yet been made.

Efforts also were noted by the Argentine power generator Central Puerto, which was looking to develop its own FSRU further upstream of the existing FSRU in Escobar, on the Parana River.

Central Puerto is a 56.2% stakeholder in Central Vuelta de Obligado, a 816MW combined-cycle power plant in the province of Santa Fe, located north of the city of Rosario.

But sources said site challenges given the shallow draft of the river, as well as navigational challenges, make Central Puerto’s FSRU proposal difficult.

While LNG supply discussions were initiated by Central Puerto earlier this year, sources in the Americas said the project appears to be on hold.

One key factor appears to be the utilisation of the FSRU and whether multiple offtakers can have access to the unit.

Whether the gas from the FSRU could be injected directly into the grid, which would benefit ENARSA, or used separately for YPF’s purposes could determine the usage among various companies, one source said.

ENARSA has also considered a new terminal but it would likely be the same one in Buenos Aires, depending on the ministry’s decision.

One market source in the Americas said indexation to a long-term contract for LNG supply into Argentina could potentially be linked to diesel, as this would be the competing fuel source. However, volumes and duration have not been disclosed.

Earlier in 2017 ENARSA tendered to replace the existing Bahia Blanca FSRU, which is currently under charter by YPF.

A source in the Americas said the country’s Ministry of Energy and Mining is expected to release its terms and conditions on the charter agreement sometime this month or by August, which should provide more clarity on the replacement process.

But the charter agreement could be extended for another year, a source said.

Upcoming power auction

An upcoming power auction in Argentina, run by grid operator CAMMESA, could bring on more opportunities for LNG, should more gas-fired generation come into the mix. However, LNG-fuelled gas projects are likely to come under competition from renewables.

YPF has stated the goal to generate 20% of its energy from renewable resources.

In December 2016, YPF announced its development a wind farm northeast of the city of Comodoro Rivadavia, in the province of Chubut.

The project would install 30 wind turbines with a planned capacity of 100MW, aided by an Inter-American Development Bank loan of about $200m.

Even for the planned power projects awarded in 2016 and new projects to be issued in future auctions in 2017, challenges remain over the physical connectivity of Argentina’s grid.

According to an April note by law firm Norton Rose Fulbright, Argentina still lacks transmission capacity for projects that were awarded in past power tenders.

An estimated 5,000km, or about 3,100 miles, of transmission lines that would be needed in the next three years.

According to a timeline by CAMMESA, the bidding stage has started for both combined-cycle and co-generation proposals, with proposals received on 7 July.

Tender awards are expected to be made by 30 August, with contract awards to be made by 1 September. Final contracts are to be signed by 1 November. ruth.liao@icis.com

By Ruth Liao