Southern Cone gas and power markets short-term outlook September 2021

The persistent hydro power crisis keeps affecting Southern Cone gas and power markets. Brazilian authorities have been adopting measures to reduce pressure into hydro reservoirs, boosting transmission availability. As a result, power marginal costs averaged R$881/MWh in September, 63% lower than the previous month. For Chile, a slight recovery in its reservoirs also supported a decrease in power prices. However, the outlook for the next few months remains similar to the lowest registered. With the end of the winter, international pipelines in Argentina has resumed operations. During September, the country averaged 0.5 Mcmd of total gas exports. Despite still low volumes, the start of the firm agreements will boost gas exports after October. Chilean gas generators will take advantage of the Argentinian gas and will be able to easily displace coal generation in the next summer.