Argentina Seeks Bolivia Gas Boost as LNG Costs Soar — Sources

LONDON/BUENOS AIRES/LA PAZ (Reuters) — Argentina is in talks to sharply raise natural gas imports from Bolivia to some 16-18 million cubic meters (MMcm) daily over the southern hemisphere winter, four sources told Reuters, though neighbor Brazil may be an obstacle to the ramp up in volumes.

The South American country is looking for alternative gas supplies after being hit hard by rising LNG costs linked to the war in Ukraine, which threaten to leave it mired a deep energy trade deficit this year. 

"Argentina is negotiating with Bolivia a very big gas import deal, as the country expects a colder winter than usual," one Argentine government source said, adding this could go up to 18 million cubic meters per day over the coming months.

That would be a more than double recent levels and far higher than the average level of imports from Bolivia of around 14 MMcm/d in the winter months last year.

The deal would also reverse a trend of declining imports from Bolivia in recent years, which have been dented by weak production in the landlocked neighbor that has caused it to fall behind on supply agreements.

A second Argentina government source and an industry source with direct knowledge of the talks said that the deal to raise gas imports from Bolivia was subject to negotiations with Brazil. The deal would be for the three-month winter period.

The industry source said talks were revolving around 16 MMcm/d, slightly lower than the government official.

Argentina's energy secretariat declined to comment.

Bolivia's state energy firm, YPFB, which is in talks over a longer-term extension to its gas supply deal to Argentina, said there was no planned statement on the matter. Bolivia's government did not immediately respond to a request for comment.

'No More To Export'

Russia's invasion of Ukraine, and sanctions against Moscow, a major gas exporter, has sharpened global gas supply fears and pushed up LNG prices to record highs this year. Countries around Latin America are scrambling to secure energy supplies. 

Argentina has approved a new gas pipeline from its huge Vaca Muerta shale formation to ramp up domestic capacity but that will not come online until late 2023-2024. 

"We have been working for months and continue to work on the issue, having been in contact with Bolivian peers for some time, even before the Ukrainian issue arose," a third Argentina government source said.

The person added details would likely be revealed on Thursday at a planned meeting between Argentina's center-left President Alberto Fernandez and Bolivia's Luis Arce.

Argentina's Economy Minister Martin Guzman is expected to travel to Brazil later this week, which will include meeting with Energy Minister Bento Albuquerque.

Brazil's energy ministry said in a statement: "At the moment, the mines and energy ministry does not expect Brazil to require less gas from Bolivia."

Emilio Apud, a former Argentine energy secretary and consultant, was skeptical about the size of the deal unless rival buyer Brazil gave up part of its agreed share.

"Bolivia doesn't have more to export, it's not that it doesn't want to," said Apud, warning a gas shortfall over winter could led to gas outages for Argentine firms.

A fifth source with indirect knowledge of the talks, said it appeared Brazil was willing to allow some of its quota of Bolivian gas to be redirected to Argentina due to strong rains that were boosting its hydroelectric energy output.

"Before the pandemic there was talk Bolivia was going to deliver 10 MMcm in the winter, now with this it is being said that they can deliver 14 MMcm. Some optimists put that as high as 18 MMcm," he said.

"Whatever the case, it's great for Argentina because it saves us hard currency."

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