Southern Cone gas and power short-term outlook: January 2021 Report

Commodity Market Report 29 January 2021

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Report summary

Improved hydrology in Brazil and Chile is reducing the gas demand in the region. After receiving 14 cargoes between December 2020 and January 2021, Petrobras issued a new gas supply agreement with YPFB for volumes over 20 Mcmd for a fixed price to rely more on Bolivian gas than volatile LNG prices in case hydro get worse. Contrary to the “prices driven by the market” philosophy of the Gas Scheme, in Argentina CAMMESA reduced the monthly tenders' cap prices. This will continue diminishing the economics of uncontracted domestic production. Argentina gas exports to Chile through GasAndes are cut, and there are only flows to Magallanes. See this report for more details on these questions: • How is hydrology impacting future electricity prices in Brazil and Chile? • Will Argentina need to import LNG in Q1 2021? • How much Bolivian gas and LNG Brazil will need to balance its gas market? • Will Argentina gas cuts persist in Chile in H1 2021?