Vaca Muerta Gas: A Catalyst for Energy Integration in South America and Exports to Brazil

South America’s plans for regional energy integration may begin to materialize this year as countries aim to leverage Argentina’s extensive Vaca Muerta unconventional natural gas reserves.

Bolivia, Paraguay, and Uruguay are competing to transport Vaca Muerta gas to Brazil, the largest consumer in the region, while there are also possibilities for pipelines to other markets, such as Peru.

Argentina’s state-owned company YPF and private firms are working to monetize Vaca Muerta’s estimated 308 trillion cubic feet (Tcf) of gas reserves, as reported by the US Energy Information Administration. They are constructing gas distribution pipelines and a three-phase LNG project that could produce up to 30 million tonnes per year by the end of the decade.

Representatives from the five countries will convene in Paraguay on September 16-17 to discuss energy integration.

Bolivia’s state-owned YPFB asserts that it is the best option for gas transportation. Oscar Claros, YPFB’s manager for gas export contracts, stated:

“Our infrastructure exists and does not require any major investments. If there were a need to add capacity, the investment would be much less than building a new pipeline.”

Bolivia is connected to Argentina and Brazil through nearly 1 000 kilometers (620 miles) of pipelines, with a system capacity of 32 million cubic meters per day. Claros mentioned that only about 50 % of this capacity is currently utilized. YPFB has committed to transporting 14 million cubic meters per day of gas from Argentina to Brazil.

Uruguay is also linked to Argentina via a 215-kilometer (134-mile) pipeline that supplies the capital, Montevideo. President Yamandu Orsi’s government plans to extend this pipeline approximately 300 kilometers to southern Brazil along Uruguay’s coast.

Fernanda Cardona, Uruguay’s minister for industry, energy, and mining, noted, “We have a technical plan for demand and what would be required for infrastructure so that Uruguay can be a viable connection between Argentina and Brazil.”

In July, Paraguay and Argentina signed an initial agreement to explore options for a 1 050-kilometer pipeline linking the two countries, with an estimated investment of around $2 billion.

However, Claros emphasized that Bolivia is not solely an option for Brazil. The Bolivian pipeline system extends to the capital, La Paz, which is geographically close to Peru, and previous studies have been conducted to transport gas to Peru.

“There is a project, which is still in the concept phase, to build a pipeline for gas exports from Bolivia to southern Peru,” he added.

Argentina already exports gas to Chile through seven pipelines, including the 463-kilometer GasAndes pipeline, which has a capacity of 10,5 million cubic meters per day and supplies central Chile. Argentina’s natural gas production reached 160,6 million cubic meters per day, an increase of 5,7 % from the previous year and the highest monthly total since 2000.