Energy
From The Report: Argentina 2018
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Over the last 20 years the fortune of the Argentine economy has been closely tied to one commodity: natural gas. In the 1990s, the construction of combined-cycle power stations allowed Argentina to produce plentiful and inexpensive energy from its conventional gas fields in the south and east. Industry forecasts were so optimistic that several trans-Andean pipelines to Chile were constructed, but after a brief period as an exporter in the early 2000s, Argentina returned to being a net importer of gas in 2008. Declining domestic production due to a lack of incentives, coupled with rising gas imports from neighbouring countries, placed the energy sector at the centre of Argentina’s economic woes throughout the 2010s; however, the sector could also hold the key to the country’s revival. A stable and attractive regulatory environment, combined with significant potential in the hydrocarbons, renewable energy, and thermal and hydroelectric generation segments, provide ample opportunities and security for global investors. This chapter contains interviews with Alejandro Sruoga, Secretary of Energy Policy, Maurizio Bezzeccheri, CEO, Enel Argentina; and Danny Massacese, Upstream Managing Director, Pan American Energy Group.

Articles from this Chapter

Overview

Redrawing the map: A focus on renewables, pipeline infrastructure and transmission connections seeks to re-establish Argentina as energy exporter
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Over the last 20 years the fortune of the Argentine economy has been closely tied to one commodity: natural gas. In the 1990s, a time of economic boom for the country, the construction of combined-cycle power stations allowed Argentina to produce plentiful and inexpensive energy from its conventional gas fields in the south and west. Industry forecasts were so optimistic that several trans-Andean pipelines to Chile were constructed, but after a brief period as an exporter in the early 2000s, Argentina…

Analysis

Magnet for investment: Production is picking up at the Vaca Muerta shale deposit
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Below the dry rocky earth of Neuquén Province lies one of the world’s most exciting energy prospects. The Vaca Muerta rock formation is found at depths of 1000-3000 metres, and covers an area of 30,000 sq km – similar in size to Belgium. The formation was given its name in 1931 by a geologist from the US who discovered its hydrocarbons content, but the technology required to exploit it would be unavailable for 80 years. In 2011, during a boom in non-conventional oil production in Texas, the…

Analysis

Footing the bill: Utility prices continue to be raised to help tackle the fiscal deficit
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One of President Mauricio Macri’s major campaign promises in 2015 was to rein in the government’s ballooning fiscal deficit by reducing costly electricity and gas subsidies. Prices that had been kept artificially low since 2002, coupled with the steady depreciation of the peso, caused many energy producers to close up shop. In response, the current administration’s progressive subsidy cuts have seen gas, electricity and water prices increase by 1200%, 1600% and 550%, respectively, between end-2015…

Interview

Transmission channel: Alejandro Sruoga, Secretary of Energy Policy, on restructuring efforts to boost competition in the private sector
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Interview :Alejandro Sruoga How are the state, private players and society contributing to the transition towards innovation? ALEJANDRO SRUOGA: Since 2016 we have gone from a situation of energy emergency to a state of normalisation. Looking to the future, we are committed to innovation in the sector, with this paradigm change being driven by technology. More renewable energy, electric mobility and the use of smart grids are good examples of interesting areas to develop. The final goal is…

Analysis

Cross-border cooperation: Argentina and Chile expand gas trade while working together to address infrastructure needs
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Despite growing domestic gas production from reserves at the Vaca Muerta deposit (see analysis), Argentina still relies on gas imports to meet local demand. The country was a net energy exporter in the early 2000s, but artificially low electricity and gas prices set by the government saw many producers leave the country from 2006 onwards, while at the same time enabling residents to consume more energy. As a result, domestic production fell and import volume increased. As of the start of 2018 Argentina…

Analysis

Big bids: The government expands sector offerings with renewable energy and offshore drilling auctions
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With a strained electricity grid and officials aiming to bring in more income to prop up the economy, the administration of President Mauricio Macri is expanding sector offerings for foreign investors. The government has been promoting renewable energy sources since 2016, and with offshore block auctions expected at the end of 2018, these two segments represent the most promising prospects for growth over the coming year. Following three successful rounds of renewable energy auctions in 2016 and…

Interview

Powering up: Maurizio Bezzeccheri, CEO, Enel Argentina, on how investments are spurring the development of electricity solutions
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Interview :Maurizio Bezzeccheri What are the challenges facing the construction of the power transmission network? MAURIZIO BEZZECCHERI:It is necessary to promote investment in the construction of power transmission lines to close existing gaps and to make the system more efficient. Although the growth in renewable energy generation represents a remarkable success for this administration, it is this same growth that makes the task even more urgent. A bottleneck exists in the system…

Interview

Exploring potential: Danny Massacese, Upstream Managing Director, Pan American Energy Group, on matching supply and demand
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Interview :Danny Massacese How would you describe Argentina as an investment opportunity in the energy industry? DANNY MASSACESE: There are opportunities present throughout Argentina’s energy sector, particularly in unconventional reservoirs such as Vaca Muerta. Further down the line there are promising investment opportunities in the electricity segment. For the gas market it will be important to expand and consolidate. At this point, the most important issue to overcome is the overall…