Southern Cone gas and power markets short-term outlook: February 2022

Hydrology keeps above average in Brazil. SECO reservoir levels jumped from 41% in January to 56% at the end of February, the highest level for the month since 2012. As a result, power spot prices have reduced to regulatory floor price, and gas demand for power plants has reached an average of 22 Mcmd. On the other hand, hydrology in Chile and Argentina keeps worsening, increasing liquid fuel consumption in the power sector. While the increase in renewables generation has driven a decrease in power prices in Chile, CAMMESA has procured additional cargoes of liquid fuels to sustain thermal generation in the next few months. Aiming to reduce such dependency on imported fuels and increase domestic gas production, the Argentine government issued a decree granting IEASA the concession of the new Tratayen-Salliqueló pipeline. The state company now runs against the clock to conclude construction before winter next year.