Southern Cone gas and LNG: what to watch in 2021 Report

Insight 06 January 2021

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Report summary

Like everywhere else, 2020 was a tough year for the gas and LNG industry in the Southern Cone, but 2021 is looking more auspicious. Governments and companies started 2021 more experienced in dealing with the uncertainties of the pandemic and containment measures. Most of the issues that raised related to the pandemic, such as delay of payments and managing the gas balance due a fall in demand, have been solved. 2021 will be the year to develop reforms that were defined over 2020. In this sense, we expect three major events will mostly shape 2021: • Investments in gas production in Argentina meeting the commitments of the Gas Scheme 2020-2024; • Brazilian gas market reform; • Measures taken by YPFB’s new administration.

Introduction
Argentina
- Domestic production response to Gas Scheme 2020-24 will determine level of gas imports
- Winter peak demand management still rife with uncertainty
Bolivia
- YPFB plays safe with lower take-or-pay and Henry Hub-indexed price in IEASA contract fifth addendum
- Argentina take-or-pay level will determine YPFB appetite for new commercialisation opportunities with Brazil
Brazil
- After delays in regulatory schedule, effective regulations will be issued
- ‘Gas Law’ approval expected following great progress in 2020
- Transport companies’ open season unlocks new gas supply agreements
- End of LDCs’ gas supply agreements will open more than 10 Mcmd of uncontracted demand
- Four power auctions increase possibilities for long-term gas supply agreements
- Petrobras will still hold the largest M&A opportunities
Chile
- Availability of Argentinian gas will depend on pace of implementation after the Gas Scheme
- Ongoing coal plant decommissioning schedule will open more room for gas-fired power plants
- but strong deployment of renewables is more likely to absorb such space