TotalEnergies gas transport vessel (LNG)
Thanks to the high temperatures that surprised in the last days, the state-owned company Energía Argentina (Enarsa) decided to cancel three awards of liquefied natural gas (LNG) vessels that were scheduled to arrive in August. Thus, the Central Bank (BCRA) will have a foreign currency relief of US$156 million next month. In turn, by selling the operation, it will receive an income of US$46.8 million.
This year, Enarsa awarded a total of 38 vessels (discounting the three that were cancelled) for a total of US$ 2769 million. Last winter, the state-owned company bought 51 LNG tankers for a total cost of US$ 1.1 billion, but at average gas prices of US$ 8.33 per million BTU (English measure used in the sector).
The pandemic exit triggered gas prices even before Russia's invasion of Ukraine broke out. Lower investments in gas production during the worst of Covid affected the available supply, which did not match the revival in demand. Therefore, this year, the price of LNG averaged US$27 per million BTU , which meant that, despite having purchased fewer vessels, the prices paid more than doubled those of last year.
"Temperatures were higher for this month. The average for the month of July was 10 degrees and we had an average of 12 degrees , which collaborated for demand to be lower and to be able to release LNG imports," explained official Energy sources.
The three vessels that Enarsa cancelled were destined for Escobar, which has a regasification capacity of 22 million cubic meters per day (m3/d), higher than the 15 million capacity of Bahía Blanca. In addition to saving the US$156 million payment for the three vessels, Enarsa sold the operation to a trader for US$46.8 million, according to the details.
"Due to temperatures above those originally forecast and the good availability of competitive electricity import supply during July, the Energy Secretariat coordinated with the gas and electricity dispatches a reprogramming that allowed capitalizing market opportunities and an efficient management of resources. Enarsa arranged with its LNG suppliers the rescheduling of dates to move product from July to August", explained the Energy Department.
"Enarsa cancelled three Escobar charges for August (lower foreign currency outflows of US$ 156 million) and will receive a premium for these cancellations of US$ 46.8 million. A rescheduling with a discount (US$2.2 million) was arranged through Cammesa for three gasoil and two fueloil tankers that moved from August to September", they added.
At the same time, in the event of an increase in the demand for energy, the company is negotiating with Brazil to reinforce the import of electric energy, in order to capture opportunity offers for August. "In case there is a need for energy, imports from Brazil are cheaper than LNG", they said.
The international increase in gas and diesel prices hit the reserves of the Central Bank, which could not take advantage of the increase in the same proportion of commodity prices. In fact, in July, the monetary entity sold more than US$ 1 billion in the exchange market, more than it had bought in the whole of June.
Miguel Pesce, president of the BCRA, indicated that in August, energy imports will decrease from US$ 2 billion per month in June and July (higher demand due to low temperatures) to around US$ 800 million.
Specifically, in the first semester, Argentina imported US$6609 million of fuels and lubricants , when in the same period last year, it had imported US$2281 million. This implies an increase of 190%, according to the latest Argentine trade report (ICA) from Indec.
In the month of June, in particular, energy imports reached US$1953 million, of which gasoil represented US$719 million; liquefied natural gas (LNG) ships, US$662 million; gas from Bolivia, US$198 million, and fuel oil, US$97 million. The main supplier countries were the United States, India, Saudi Arabia, the United Arab Emirates, and the Netherlands.
"Among imports, purchases of processed fuels and lubricants were particularly noteworthy, reflecting the greatest variation and increase in absolute values of all the sub-categories (1,047 million dollars). This increase, which was due to a rise of 118.9% in prices and 19.6% in quantities, contributed directly to boost the value of imports to real values", says the Indec report.