Lack of investment and lack of vision: what are the causes of the gas shortage and which sectors does it affect?

The gas shortage escalated to emergency levels this Tuesday night when the government decided to shut off gas at all service stations Compressed Natural Gas (CNG) of the country as well as of Large industrial users. In other words, levers were lowered not just on “incumbent” contracts, but also on those considered “firm”. Power generation plants are using minimal fuel, a step ahead of scheduled power cuts. In the CNG sector they talk of a “perfect storm”.

This decision was taken by the crisis committee convened by Secretary of Energy who drives the Eduardo Rodríguez Chirillo till National Gas Regulatory Unit (ENARGAS)The Wholesale Electricity Market Management Company (CAMESA) And companies in the region refused to pay more than USD 20 million of the shipment cost of an LNG ship purchased from Brazilian Petrobras with a letter of credit. This implies a shortage of 14 million cubic meters in the gas pipeline network. In addition, two compressor plants also faced technical problems Transportadora Gas del Norte (TGN) In Córdoba and San Luis, already generalized, which caused the loss of another 2 million cubic meters.

in reply to the question of infobaeThe Energy Ministry said the Petrobras vessel has been in operation since 9 a.m. this Wednesday and “supply disruptions will be regularized throughout the day.”

Adding to the events was that the polar cold wave arrived earlier than expected in Argentina and, therefore, energy consumption skyrocketed in recent weeks. Demand from households and industries reached 80 million cubic meters per day, almost double the 45 million cubic meters usually consumed at this time of year. The first to suffer were disrupted supplies to CNG stations and industries with disrupted contracts.

Economist at UBA’s IIEP, Julian Rojohe explained: “There is no gas because they did not buy it. In recent years, during May, about 7 LNG shipments had a mooring date of around 12-14 MMm3/day during the month. With a mooring date of May 24, there are only 3 shipments for 5 MMm3/day. In addition, Bolivia cannot send more than 5 MMm3 per day.”

To summarise, there are five reasons why the country’s natural gas shortage has worsened and supply cuts have deepened:

1) Delay in public works of expanding the gas pipeline network,

• The Nestor Kirchner Gas Pipeline (GPNK) was designed to transport about 11 million cubic meters per day (MMM3/d) of natural gas from Vaca Muerta to the connection with Nuba II at Sallikelo. Two additional compressor plants of 5 MMM3/d each were put to tender to increase their capacity to 21 MMM3/d.
• Although the GPNK was ready from the beginning of August 2023 and currently transports 13.3 MMm3/d, the Tritien and Sallikelo compressor plants had to be completed during the spring of last year.
• The completion of these plants has been considerably delayed due to problems of import of inputs and shortage of foreign exchange, interruptions in public works. The work is expected to be completed on June 29, although some sectors of the energy sector assure that there will be further delays.

2) Technical problems in gas transporters,

• Technical problems in two compressor plants Transportadora Gas del Norte (TGN) In Córdoba and San Luis.

3) Lack of foresight in supply planning,

• The Energy Ministry did not contract a regasification ship for Bahía Blanca during the summer, which could have provided about 13 MMm3/d of natural gas to the system in the winter as a backup.
• Delay in unloading of Brazilian LNG cargo
• The decision not to spend about $100 million on this backup, added to the cost of ships carrying the liquefied gas, now too expensive because of the anticipated cold.

4) High cost of liquid fuel imports,

• The gas shortage is now met by importing liquid fuels (diesel and fuel oil) for thermoelectric plants at a cost of over $500 million.
• With two more liquefied gas ships sunk between May 14 and 23, barely $60 million could be spent.

5) Additional climatic and operational factors,

• Temperatures were surprisingly low in May, boosting demand for winter homes.
• Flooding in Porto Alegre, Brazil, cut off a potential source of hydropower imports.

The first to be impacted by the natural gas shortage in recent weeks were “interrupted contracts”, where cuts are introduced to more efficiently manage the capacity to transport gas to homes. These types of agreements, unlike “firm” agreements, are more economical and mainly involve about 200 stations that supply CNG. Amba, but also in other parts of the country and for some industrial users.

But this Tuesday a combination of adverse events brought the system to a critical situation. Therefore, the crisis committee headed by Energy decided to cut supply to all CNG stations in the country, large industrial users and thermal power plants across the country.

“Gas supply to non-priority demand (industries, thermoelectric plants and CNG stations) was cut to take care of priority users (hospitals, schools, homes and businesses). The aim is to be able to continue supplying priority demand and residential households,” he said at the secretariat.

There are two hidden risks that the company wants to avoid. Secretary of Energy. The first risk is that gas shortages are felt in plants where liquids are burned to generate electricity, that is, this translates into scheduled power cuts. To this end, Energia asked Camesa to use gas transport only to the technical minimum and to use liquid fuels to maintain electricity demand.

The second risk, dismissed by the government and distributors, is that residential gas supplies will be cut. In theory, these customers are “uninterrupted” and cuts would pose major risks to the safety of the population.

This emergency arises in a context of lower temperatures than expected at this time of year, inadequate supply planning and savings in both imports and actions by the government to maintain a fiscal surplus. For example, last week CAMESA went out to offer urgent tenders for shipments Gas Oil And fuel oil This would cost the exchequer about USD 500 million, an expenditure that was not originally planned. It also included an LNG ship from Brazil.

A clear example of this is the delay in “full” start-up Nestor Kirchner Gas PipelineDue to the import problems that occurred during the previous government and the current management’s brakes on allocations for public works, it is currently operating at half its capacity.

Photos: Adrian Eskander