Argentina Targets LNG Price of $30-32/MMBtu in New Tender

(Reuters) — Argentina, racing to secure winter gas supply, is targeting a liquefied natural gas (LNG) price of $30-32 per million British thermal units (MMBtu) in a new tender to buy 12 cargoes, the head of the state energy firm directing the process told Reuters.

The expected price range for the tender on Wednesday, previously unreported, comes as global buyers battle with sky-high LNG prices that have been pushed up by the war in Ukraine and related sanctions against major gas exporter Russia.

The price is more the double the highest price Argentina paid last year though down slightly from a previous tender in March.

"I would not like to estimate the price for tomorrow, but we understand that it will be in the order of $30-32 per million Btu and if we have some luck, maybe a little less," said Agustín Gerez, president of state energy firm IEASA.

The average price in a tender last month for eight cargoes had been $35 per MMBtu, he said, adding that global prices have dipped slightly since then which he cited to lower demand from Europe and a lockdown in China.

The South American country's government has come under some criticism for the relatively small amount of LNG cargoes bought so far this year versus the same time last year, though Gerez said there was no issue securing supply.

"So far we have not had any difficulties in obtaining the volumes that we have put out to tender," he said, explaining the state had 23 listed producers and traders who fulfilled tenders awarded to them with whatever cargoes they had available.

Rare Egypt Cargoes

The country is set to receive two rare cargoes of LNG from Egypt, the first since 2013, a reflection of how a tight global market is pushing shifts in supply routes.

The two vessels — the BW Brussels and the Stena Clear Sky — are on route to Argentina's Escobar port after taking on LNG in the Egyptian ports of Damietta and Idku, trade flow data from Refinitiv Eikon showed.

"With a tight supply market, people are now looking beyond traditional sources," said Olumide Ajayi, senior LNG analyst at Refinitiv, an LSEG business. "It underlines the fact that they are looking elsewhere and everywhere for volumes."

Many LNG buyers globally are trying to sign medium- or long-term supply contracts with providers from the United States to the Middle East to secure cargoes amid rocketing demand fueled by the prospect of less imports from Russia.

Argentina, which buys LNG on the spot market through tenders led by IEASA, has scrambled to get more gas from neighbor Bolivia, though not enough to offset pricey LNG imports.

High LNG prices have hurt the country, which is headed for a potential energy deficit this year of some $5 billion despite being home to the Vaca Muerta shale formation, the world's second largest reserve of shale gas and No. 4 for shale oil.

"The import bill can be very volatile, that's one of the vagaries of having to rely on the spot market," Ajayi said.

In 2021, Argentina hit almost pre-pandemic LNG import levels with a total of 56 cargoes, according to data from IEASA. The shipments last year came from the United States, which has been rapidly ramping up production, Qatar, and Trinidad and Tobago.

 

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