Southern Cone gas and power short-term outlook: June 2023

Argentina accomplished an important milestone in June. The government started filling the first part of Nestor Kirchner pipeline on 20 June and expects to conclude the commissioning on 8 July. The new pipeline will increase Argentinian production by 6% and lower LNG requirements by 45% in July. However, Argentina will still need Bolivian gas for the Northwest provinces and, together with the increase in gas-fired generation in Brazil, they will increase Bolivian exports to 25.6 Mcmd on average until November. On the power side, the Southern Cone countries’ systems, highly influenced by water availability in the region, enter the dry season. The above-average inflows in Brazil led to zero marginal costs for the eighth month. In Argentina and Chile, despite the good hydrology, reservoir levels remain critical. The economic slowdown keeps load growth low and ends up mitigating the impact of hydrology on prices.