South American oil and gas infrastructure development activity has been limited in recent years with the exceptions of Brazil, Guyana, and Argentina. These nations also, however, face macroeconomic complexities that slow the implementation of new projects and investment. Álvaro Ríos Roca, managing partner of consultant Gas Energy Latin America, points out that although the region’s infrastructure is “highly developed,” countries face difficulties increasing production. Shifts in the regional energy landscape also necessitate a reevaluation of the use of existing infrastructure.
Brazil, Bolivia, Argentina
Ríos Roca cited Colombia and Bolivia, both of which face serious gas supply constraints, as examples. Without new infrastructure, both will soon be forced to import gas at exorbitant costs. Colombia, potentially facing severe restrictions by 2027, and Bolivia, already anticipating purchases by 2024, must explore alternative supply sources.
“Venezuela, despite having a gas pipeline to Colombia, lacks new or sufficient production. The Argentine case is relatively similar,” explained Ríos Roca, former secretary of hydrocarbons in Bolivia. In Argentina, the macroeconomy is the stumbling block preventing development of a regional market comprising Bolivia, northern Chile, Brazil (Cuiabá and São Paulo), Uruguay, and northern Argentina. “This area represents an aggregate demand, 15 years from now, of 65 million cu m/day (MMcmd), [driven by] burgeoning mining developments, primarily lithium. Substantial investments are necessary,” he added.
Ríos Roca also suggested Argentina should entrust infrastructure projects to private entities, as its interest is not in supplying the local market but rather exporting to neighboring countries. Regarding Brazil, he noted that presalt developments—focused on oil, but with substantial associated gas—"won’t be market-ready for several years and cannot be rushed. Some fields have high CO2 content, making development expensive. [But] Argentina’s natural gas is competitive throughout the region,” he emphasized.
In this context, “the most urgent need is the reversal of Argentina’s Northern Gas Pipeline (NGP), which, once completed, will allow the creation of loops, complementary works, and compression plants on Bolivian pipelines, [supplying gas to] São Paulo’s industrial belt.” The Northern Gas Pipeline, operated by TGN, spans 986.4 km and transports 10.22 billion cu m/year (bcmy) (Fig. 1).
As part of Argentina’s Transport A plan, state-owned company Energía Argentina SA (ENARSA), owner of the pipeline, received three bids for the reversal, which will require an estimated investment of $710 million from the national government, $540 million of which will be provided through a loan from the Development Bank for Latin America and the Caribbean (CAF).
The project involves construction of a new pipeline between Tío Pujio and La Carlota in Córdoba province, spanning 122 km with 36-in. OD pipes. It also includes two loops of 62 km alongside the Northern Gas Pipeline route, with 30-in. pipes. Additionally, the reversal will change the gas injection direction in four existing compressor plants in Córdoba, Santiago del Estero, and Salta, Argentina.
The country has 30 gas pipelines and five oil pipelines, giving it the most extensive gas network in the region, supplying gas from various basins. NGP’s reversal, which would enable gas exports to Bolivia and supply northern Argentina, is in the bidding process. Work on the second phase expansion of the 537-km, 11-MMcmd President Néstor Kirchner Gas Pipeline (GPNK), from Neuquén basin to Santa Fe, Argentina, is under way. The expansion will add compression to double capacity to 22 MMcmd (OGJ Online, July 7, 2023).
In early October 2023, the 16-in. OD NorAndino Gas Pipeline between Salta, Argentina, and Antofagasta, Chile, resumed operations after 13 years of inactivity.
Ríos Roca also advocated for new investments to allow Argentine gas to flow through Transportadora de Gas del Mercosur’s (TGM) 5.5-bcmy Uruguaiana pipeline, running from Paraná, Argentina, to Uruguaiana, Brazil. TGM is a joint venture of TotalEnergies SE, Tecpetrol SA, Central Puerto SA, and Compania General de Combustibles SA.
“It’s evident that Argentina must explore, must earnestly discuss LNG; it must focus on LNG because natural gas is undoubtedly the key element for the planet’s decarbonization. Without natural gas, there’s no decarbonization, no energy transition,” said Ríos Roca. “We must replace the 30% of the world’s energy mix that still relies on coal. Argentina, I believe, has the opportunity to embark on several intriguing projects in the next 30 years.”
Argentina is also strengthening its crude oil pipeline system with the Duplicar expansion of the 47,583-cu m/day (300,000 b/d) OldelVal pipeline. OldelVal transports crude oil from Neuquén to Puerto Rosales, which delivers the cargo to Oiltanking Ebytem on the coast of Bahía Blanca. To accompany this expansion, Oiltanking Ebytem (controlled by the German Oiltanking GMBH with 70% of the shares and YPF SA, which holds the remaining 30%) is carrying out a plant expansion. The plan requires an investment of $498 million, will be executed in four phases, and will increase the terminal’s storage capacity from the current 480,000 cu m to 780,000 cu m spread across 18 tanks.
OldelVal also supplies crude to the Plaza Huincul (Neuquén) and Luján de Cuyo (Mendoza) refineries. Duplicar will add 525 km of pipelines in Río Negro, La Pampa, and Buenos Aires provinces, as well as a new terminal in Puerto Rosales. The $1.18 billion project will take 22 months to build in two stages. Ship-or-pay contracts with customers were signed in December 2022, and the 150,000 b/d expansion is expected to enter service by the end of 2024. An expansion is also planned for the 110,000 b/d trans-Andean Vaca Muerta Norte-Otasa pipeline to the Chilean Pacific coast.
Additionally, YPF has proposed the 700-km greenfield Vaca Muerta Sur pipeline, which would transport crude from the basin to Punta Colorada at Golfo San Matias on Argentina’s Atlantic Coast. Phase 1 of this project would connect Vaca Muerta to Allen, with Phase 2 completing the journey to the coast.
Commenting on the state of gas flow on the rest of the continent and beyond, Ernesto Díaz, senior vice-president of Rystad Energy for Latin America, stated that the “only integrated market, primarily through gas pipelines, is Brazil, Bolivia, Argentina, and Chile. Everything else consists of individual countries. Colombia on one side, Ecuador on another, Peru on yet another, and Mexico with the United States, which is an entirely different integration.”
He also commented on Petrobras’s presalt work, noting that though it primarily yields light crude it also contains associated gas. Midstream projects to transport this gas include the Rota 4 (~300 km, 20 MMcmd), 5 (200 km, ~14 MMcmd), and 6 (120 km, 12 MMcmd), Buzios 5 (6 MMcmd), Jubarte-Roncador, and Espirito Santo pipelines. “Then there’s the expectation [that gas] from Vaca Muerta [will] reach the south of Brazil and São Paulo. When you reach São Paulo, you enter Brazil’s entire pipeline system and can market it nationwide. The most dynamic market is the Southern Cone, particularly in terms of midstream infrastructure, primarily due to the gas sector.”
However, consultant and former secretary of hydrocarbons of Argentina, José Luis Sureda, mentioned that Brazil’s Rota projects are being reevaluated after building a few. “Currently, Brazil doesn’t have a bottleneck in terms of transport, and its production is increasing. Presalt gas is far away and expensive to bring onshore. In this case, the equation is against the Brent price, and they need the gas for reinjection to prevent crude loss. They lose oil recovery by not injecting gas into the wells. So, on one hand, if they don’t reinject, the fields deplete faster, and they lose a lot of money because their oil production drops. So, their equation isn’t just domestic gas versus LNG; the real equation is oil versus gas.”
“Brazil has initiated a gas exploration program in Rio Grande do Norte and an offshore exploration where they have confidence in finding gas,” Sureda continued. “Thus, there is no urgency for Brazil to buy natural gas from Argentina to cope with the decline in Bolivian shipments.”
In contrast to Ríos Roca, Sureda asserted that it isn’t as straightforward for Bolivia to import gas from Argentina as it is to reach Brazil through the Bolivian pipelines. “Bolivia has more than enough transport capacity today. They have produced up to 60 MMcmd of gas and are currently producing half of that.”
Bolivia faces two problems, Sureda explained, declining gas export revenues and increasing LNG imports. He also questioned the export of Argentine gas to Brazil via Bolivia due to trade-offs regarding infrastructure use and the participation of third countries. Additionally, “Bolivia has an exploration plan in progress. They have 8 or 10 prospects, although they haven’t had significant successes so far, it’s still a plan, and there’s much left to explore.”
Ecuador, Peru, Colombia, Chile
Ecuador has two oil pipelines: the 360,000 b/d Sistema de Oleoducto Transecuatoriano (SOTE), managed by state-owned Petroecuador, and the 450,000 b/d Oleoducto Crudos Pesados (OCP), owned by a consortium led by Pampa Energía SA (majority shareholder), Andes Petroleum, and Perenco. (Repsol was part of this consortium, but its shares are in the process of being transferred to Pampa Energía.) OCP is used for transporting Napo crude, which has 19° API and 1.96% sulfur. However, in 2022, OCP only transported an average of 150,000 b/d. By contrast, SOTE shipped an average of 320,000 b/d of medium-grade crude (24° API, 1.59% sulfur), primarily Oriente, for export. Both pipelines transport oil from the Amazon to the Pacific Coast; SOTE reaches the Balao Maritime Oil Terminal and the Esmeraldas refinery, while OCP reaches the Esmeraldas Marine Terminal.
Beyond the political instability surrounding its recent election of Daniel Noboa as president, the problem for oil production in Ecuador is that in August 2022 a referendum was held in which Ecuadorians voted in favor of stopping the exploitation of Block 43, located deep in the jungle within Yasuni National Park. Jorge Vudgdelija, executive president of OCP, added that due to the regressive erosion of the Quijos River, plans must be made to prevent damage to the block’s export pipeline: “In the medium term, significant investments related to changing the pipeline route must be made. The pipeline is 485 km long, from the Amazon to the Pacific coast. About 50 km need a route change. We are talking about a pipeline that almost entirely crosses the Andes mountains.” Vugdelija clarified that a hydrological phenomenon in the region causes landslides, road damage, and general infrastructure collapse. He added that for both OCP and SOTE to operate, upgrade projects must be carried out and constant maintenance is required in the meantime.
Ecuador is also exploring agreements with Peru and Colombia to use part of its idle pipeline capacity by loading crude from these countries at the Nueva Loja terminal. Vudgdelija confirmed that OCP is already transporting around 15,000 b/d from Colombia and is negotiating with Peru. “With Peru, we are conducting a pilot test to transport production via the Napo River. Currently, they evacuate through the Amazon River, but the barges take 45 days to reach the Atlantic. Our growth prospects are tied to these two projects.”
Peru, like the entire Andean region, is experiencing a production decline, so it also has idle pipeline capacity. The country, however, has the region’s only LNG plant—the 4.4-million tpy Peru LNG in Pampa Melchorita—supplied by gas from the Camisea project (a consortium composed of Pluspetrol Peru Corp. SA, Hunt Oil Co., Tecpetrol SA, Repsol SA, and Sonatrach Petroleum Corp.), which produces natural gas and condensate from Blocks 88 and 56.
“In Lima and southwards, they have been trying to build a gas pipeline for years, but they never manage to agree or secure financing. They can’t develop the market now because they lack infrastructure, and they have to build it,” said Sureda regarding potential Southern Peru gas pipelines, a new LNG plant in Ilo, and a Bolivia-Peru gas pipeline.
Rios Roca stated, “Camisea has reserves for more than 15 years with a good supply, but, like Bolivia’s fields, at some point, they will start to decline. Peru needs to consider new exploration near Camisea because...Camisea gas is fundamental for Peru’s energy.”
Colombia is going through a period of flux in its oil and gas industry. On one hand, President Gustavo Petro is focusing on environmental needs and renewable energy. On the other, the country has an energy matrix highly dependent on gas (60%), which is expected to be depleted by around 2027. “Colombia will likely have to reach some agreement with Venezuela. Colombia has six gas pipelines, but to obtain new sources, it should invest in connecting its network with Venezuela. There’s a suspended project between the two countries, the Transcaribbean Gas Pipeline. Its 224 km would connect Venezuelan gas fields with the northwest of Colombia,” explained Sureda.
In the 24th edition of the Gas Colombia Report, Juan Manuel Rojas, president of transport company Promigas SA ESP, stated the need to explore the possibility of importing gas from Venezuela. “We must not close that door; all options and alternatives must be on the table because we need to ensure the sustainability of Colombia’s energy matrix.” Much still depends, however, on conditions set by Venezuelan Pres. Nicolas Maduro and sanctions imposed by the US Treasury.
Chile is entirely dependent on oil and gas imports and lacks developed midstream infrastructure. The country produces about 1 MMcmd of gas in its south. In 2017, it resumed gas imports from Argentina to its central region via the Pacific Gas Pipeline, which Argentina has guaranteed through 2024.