This Tuesday, June 20, the President Nestor Kirchner gas pipeline (GPNK)through the filling process. The official inauguration ceremony, in which President Alberto Fernández and the Minister of Economy, Sergio Massa, will participate, will finally be for the July 9, for political and electoral reasons.
The infrastructure work will have a strong exchange rate impact, given that a positive energy balance is projected for 2024, and a fiscal impact, because subsidized energy will be more competitive than imported LNG.
What will happen this Tuesday will be the opening of the valve and the beginning of the filling process, which is the process that takes the gas to get from one end to the other. “The gas pipeline filling process responds to usual procedures in this type of system, which involves progressive phases of sweeping and pressurizing the pipes,” official sources indicated. In addition, they outlined a qualifications scheme by sections.
Construction of the gas pipeline began last August when the first contracts were signed, so a work that can take about 2 years was completed in 10 months, an attribute that stands out both in the Ministry of Energy, headed by Flavia Royón, and in the state company Energía Argentina, led by Agustín Gerez, as well as the private companies in charge of construction. It has an extension of 573 kilometers, from the province of Neuquén to the center west of Buenos Aires.
Despite the fact that the completion date of the work was met, Finally, this Tuesday, June 20, there will be no opening ceremony. As Ámbito was able to find out, the reason is electoral. For one, until last week, it was not known if Massa was going to be in the country, given that he plans to travel to the United States to close negotiations with the IMF. In Economy they emphasize that Massa was “fundamental” for the gas pipeline, since the work began during his administration, and when he was president in the Chamber of Deputies “gathered” votes for the tax on large fortunes, that part of his collection was used in the construction.
But, in addition, for a work of this type, with the economic impact that it can have, all the senior officials would want to be there, in a context in which the internal ones burn, in the decisive hours for the closing of lists, where it is not yet defined whether there will be a STEP or a single application. Passing the act for July 9 will mean being able to take the candidate for president that has already been defined, and “capitalize him politically”, with the campaign already launched.
Foreign exchange and fiscal impact
In practical terms, the pipeline will increase the delivery of gas from Vaca Muerta to large urban centers, from Tratayén to Salliqueló. In a first stage, it will add 11 million cubic meters (m3) per day, and then the flow will almost double, reaching 21 million m3 per day, when the two new compression plants are enabled.
The start-up of the gas pipeline will be important in exchange matters. In fact, one of the current big problems with the lack of dollars is due to the fact that the energy balance in 2022 was negative at US$4.6 billion, as a result of LNG imports at historic international prices after the war in Ukraine. The transfer of the gas It will allow energy savings of US$2,000 million during the second half of 2023, and will reach US$4,200 by mid-2024.
In aggregate terms, in Energy they estimate that this year the energy balance will become “balanced”, and that it will have annual improvements, until it reaches 2030 export revenue of US$18 billion. This will have a political meaning: the energy sector will consolidate as the second generator of foreign exchange, given that today the export matrix is concentrated in the agricultural sector.
In addition, the impact will also be fiscal, due to energy costs. Although the State withdrew the generation subsidies for the higher-income population, it maintains them for the millions who registered in the segmentation. This is how Royón described it in a dialogue with Télam: “These subsidies clearly mean a significant outlay for the State. With a more competitive energy matrix, the State first has to allocate fewer resources to sustain these subsidies, and that leads to fiscal order, and of course, to directing and stabilizing the macroeconomy, because it will mean very important fiscal savings”. In addition, for those who no longer have subsidies, he anticipated that it will imply lower rates: “It will mean cheaper energy, because we will not need to import gas, which makes it up to six times more expensive.”
The third major impact expected is in the industry: in the Government they hope that cheaper energy implies lower costs and a more competitive industry.
What’s missing
In any case, the commissioning of the gas pipeline is only the first stage. Forward will remain the reversal of the North gas pipeline and the second stage of the Néstor Kirchner, to reach San Jerónimo, in Santa Fe. The completion of the three works will imply that Argentina has practically 95% energy self-sufficiency (except in winter peaks), that it can export firmly in summer, and stop importing from Bolivia.
For the reversal of the northern gas pipeline, the Government already has financing from CAF for US$ 540 million, and the other $173 that is missing could be financed by the Treasury or by the private sector. The case of the second tranche is different, which, although the investment can be recovered in 2 years, has a cost of about US$ 3,000 million, in which there is still no firm financing, beyond the proposals of a company China and the development bank of Brazil.
Source: Ambito
