LGC highlights potential and challenges for gas in the region

LGC hig hlig hts po tential and challenges for gas in the r egio n

The 2019 edition of the Latin America and Caribbean Gas Conference & Exhibition (LGC) was held in Lima, Peru, November 14-15. Promoted by IGU, ARPEL and OLADE in partnership with EnergyNet, the event is one of a number of initiatives to further the development of the region’s natural gas industry. By Jennifer Arnau and Pablo Farragut

LGC 2019 brought together 130 professionals from throughout Latin America and the Caribbean to uncover investment opportunities in the region’s gas sectors. Delegates included 12 high-level government officials and representatives of regulatory bodies, national and international gas companies, investors and solution providers.

The event was scheduled to coincide with the Latin American Energy Organisation’s (OLADE) Energy Week in Lima, which hosted Ministers of Energy and high-level representatives of all 27 member countries from Latin America and the Caribbean. LGC Advisory Board members and sponsors were provided access to the closed-door ministerial roundtable discussions on energy policies and strategies to promote clean energy development in all nations, as well as via cross-border initiatives.

With a combination of speakers at the most senior level in the value chain, the discussions and dialogues which occurred not only on stage, but amongst delegates in the networking breaks and “deep dives” (closed-door, country-focused meetings), highlighted the vast opportunities in the region to collaborate and share best practices. The key agenda topics were:  Policy and regulation;  Energy transition;

c In a panel discussion moderated by Diego Goldin, CEO of Global Gas Mobility (far right) are (from left to right): IGU Secretary General Luis Bertrán Rafecas; Guillermo Adolfo Koutoudjian, International Affairs Coordinator in Argentina’s Ministry of Energy; Andrew Hepburn, Gas Policy and Regulatory Affairs Manager at Shell; and Orlando Cabrales Segovia, CEO of Colombia’s Naturgas and IGU’s Regional Coordinator for Latin America and the Caribbean.

Eduardo Alfredo Guevara Dodds, Peru’s then Vice Minister of Hydrocarbons.

 Equalising offer and demand;  Regional integration; and  Opportunities for investment.

The event reinforced the importance of getting the right regulatory frameworks in place to allow for regional collaboration, and the essential role gas will play during the context of an energy transition. With this momentum, LGC is fast becoming the most important gathering between key private and public sector players across Latin America and the Caribbean.

Highlights by country and sub-region Argentina

The production of unconventional natural gas grew by 7.9% year-onyear and now represents 45% of total production, which is estimated at 144 mcm/d. The new supplies have allowed Argentina to resume gas exports to Chile and Brazil, and put into operation a liquefaction project (Tango FLNG in Bahía Blanca) with a capacity of 0.5 mtpa.

The challenges ahead are: achieving a greater penetration of natural gas in regional markets; the development of greater production and transportation capacity; and to increase competitiveness to become a global LNG player.

Brazil

The Brazilian government’s gas market reform seeks to move from a vertically integrated model dominated by Petrobras to a competitive market that can increase efficiencies due to a multiplicity of actors, thus reducing the cost of gas for the industrial sector. The reform will allow more companies to enter the market, third-party access to LNG terminals and gas pipelines and greater distribution diversification. Investment is also needed to develop the network of gas transmission pipelines. The price of natural gas in Brazil for the consumer is around $10 per million Btu and it is estimated that with the measures adopted it can be reduced by up to 40%.

Currently, two LNG-to-power projects are underway, one in Sergipe State which was starting up at press time and one in Açu (Rio de Janeiro State) due to start up in 2021, while other projects are on the horizon.

Meanwhile, Brazil’s pre-salt reserves are being developed and the challenge is to monetise the associated gas. In five to 10 years the prediction is for this gas to begin to be competitive.

Peru

The main energy policy objectives are to increase the number of homes connected to the natural gas supply from 1 to 1.5 million by 2021 and oil production from 60,000 to 100,000 b/d by 2022.

As regards the distribution of natural gas, investments of $450 million have been announced with contracts already signed for the northern regions of Tumbes and Piura, while at press time a contract was expected to be signed for the Seven Regions project. This will carry natural gas to the southeast of the country (Uyacali, Junín, Huancavelica, Apurímac, Ayacucho, Cusco and Puno).

At the individual residential level, the Bonogás programme offers soft financing for connections and other benefits to facilitate access to natural gas.

Bolivia

Three-quarters of Bolivia’s gas production is exported, but with its

Seferino Yesquén, Chairman of Perúpetro.

Symone Araújo, Director of the Department of Natural Gas in Brazil’s Ministry of Energy & Mines.

two markets (Argentina and Brazil) increasing domestic production their import requirements will fall. Bolivia thus needs to increase domestic demand and develop new export markets. The country already has a large fleet of natural gas vehicles (390,000) and aims to develop the industrialisation of natural gas (e.g. petrochemicals and urea), while Paraguay and Peru are potential export customers.

Venezuela

Venezuela has the world’s sixth largest gas reserves of 6.3 tcm and if they were to be developed for export in a big way the country’s strategic location would make it a game changer at the regional level.

Central America and the Caribbean

As it stands, there are two main drivers for the penetration of natural gas in the energy matrix of countries in Central America and the Caribbean. These include their proximity to major exporting countries (USA and Trinidad and Tobago) and the opportunity to replace imported diesel for electricity generation and other uses.

Currently, the Dominican Republic, Jamaica, Panama and the US Commonwealth of Puerto Rico have regasification terminals. El Salvador is developing an LNG-to-power project due for start-up in 2021, while Cuba and Trinidad and Tobago have domestic production and the latter is a longstanding LNG exporter.

The main challenges are linked to the characteristics of demand, which is fragmented in small countries, and to the financing of projects.

LGC 2020

The Latin America and Caribbean Gas Conferences will continue to explore new opportunities presented by the development of natural gas

v Antonio Isa Conde, the Dominican Republic’s Minister of Energy & Mines and Rosanety Barrios Beltrán, an independent energy analyst previously with Mexico’s Ministry of Energy.

Verónica González, Hydrocarbons Advisor in Uruguay’s Ministry of Industry, Energy & Mines.

in the region. Under the theme “Gas for Growth”, LGC 2020 will be held in November.

Jennifer Arnau is the Conference Producer at EnergyNet and Pablo Farragut is the Project Manager at ARPEL. For more information on LGC 2020, visit: www.energynet.co.uk.