Insight
Argentina gas prices – Part I: How current pricing and contracting impact the supply outlook
Report summary
Gas pricing and market regulation are again under discussion in Argentina. The coronavirus pandemic has weakened an already vulnerable economy, with the impact felt in the gas market. Local distribution and power generation sectors have defaulted on payments to producers. As a result, the new administration is proposing a ‘pricing review’ to ease the economic crisis and lower gas prices for end users. As history has shown us, a price control policy will prompt a supply response. Unlike before, 40% of production is from steep-declining unconventionals and supply shortfalls will be accelerated. In this report, we analyse gas pricing and contracting in Argentina, focusing on: • How domestic production has reacted to previous pricing policies • What is driving current gas pricing dynamics • Domestic production levels and gas balances for 2020-2022 • What LNG imports, infrastructure and cost will be required to deal with production decline • The impact on Argentina-Chile gas trade.
Table of contents
- Executive Summary
- Pricing phases over the past two decades
-
What has driven prices since the new administration started?
- Changing market mechanics
- Coronavirus and early definitions of a price control policy
- The ‘V’ shape caused by gas price control and further pricing subsidies to recover production
- Initiatives towards the ‘normalisation’ of the gas market
Tables and charts
This report includes 7 images and tables including:
- Historical gas prices in for Neuquen production at the entry of the transport system and price subsidies
- Argentina’s historical domestic gas production, price regimes and policies for upstream
- Average weighted Neuquen gas prices for firm and interruptible contract at the entry of transport system (2019-2020)
- Full-cycle breakeven gas price for Argentina gas production at the entry of the transport system
- Remaining-life breakeven gas price for Argentina gas production at the entry of the transport system
- Argentina’s gas balance (2016-2022)
- International gas trade (+exports, - imports) and additional impacts of downgraded supply outlook
What's included
This report contains:
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