Southern Cone gas and power short-term outlook: July 2022

Despite below-average hydrology in July, the modest demand growth in Brazil enabled the system operators to slowdown reservoir levels depletion. For this reason, gas demand for power dispatch remained below 8 Mcmd. This situation enabled Brazil to call for extra thermal dispatch to export electricity to Argentina. In Argentina, severe winter has maintained residential and commercial gas demand at elevated levels. To meet the gas demand in July, the country counted on higher flows of Bolivian gas and more LNG cargoes than the previous month. We expect milder temperatures in August along with high flows from Bolivia will reduce LNG requirement. Due to water-saving measures and better hydrology in July, Chile managed to improve reservoir levels. This reduced the need for gas and coal-fired generation and, as a result, spot prices in the month decreased in the Central region. Although gas-fired generation has reduced, Chile kept gas imports from Argentina on average of 2.8 Mcmd.