A pipeline for delivering up to 100,000 b/d of crude oil from Neuquen, the largest source of crude in Argentina, to Chile is poised to start operations next year, boosting expectations of an increase in crude exports as production rises in the Vaca Muerta shale play, Neuquen Governor Omar Gutierrez said. The Transandean Pipeline, as it is called, “will be operational next year, according to the information that we have,” Gutierrez said. A project to refurbish the pipeline after 16 years of disuse has started, he told reporters after announcing that Argentina’s state-backed energy company YPF and Norway’s Equinor will launch a new pilot project in Vaca Muerta, one of the world’s biggest shale plays. Neuquen is home to most of the play. The pipeline revamp has been on the cards for several years, as rising output from Vaca Muerta uses up existing pipeline capacity to deliver supplies to the domestic market and to ports on the Atlantic coast for export. On Jan. 26 this year, Argentina and Chile reached a deal to refurbish the Transandean Pipeline. The state oil companies of Argentina and Chile, YPF and ENAP, respectively, built the pipeline in the 1990s to supply the Bio Bio oil refinery to the south of Santiago from fields in Neuquen. But flows stopped on the 100,000 b/d line in 2006 as production declined in Argentina from a peak of more than 840,000 b/d in the late 1990s to less than 450,000 b/d in 2020, leaving it in need of refurbishing to restart deliveries. With production recovering in Argentina, led by the development of Vaca Muerta, companies have been looking for new outlets for the crude beyond the domestic market, and the Transandean has gained attention because it can be used to sell to the Asian market. Argentina already supplies all of its 450,000 b/d to 510,000 b/d of demand, meaning that for production to continue growing then infrastructure must be built to widen exports.
Argentina’s oil production reached 533,000 b/d in September, with 214,000 b/d coming from Neuquen, according to data from the national and provincial governments. Gutierrez has forecast that the province’s crude output is poised to reach 235,000 b/d in December this year and 285,288 b/d a year later, meaning that more pipeline capacity will be needed. In his comments to the press, the governor said Oleoductos del Valle (Oldelval), a pipeline operator servicing Neuquen, is increasing its capacity by 50,000 b/d. “According to the information that we have, this extension would be operational for the first quarter of next year,” he said. That would take Oldelval’s capacity to deliver 264,000 b/d to Buenos Aires, up from 213,000 b/d this month, according to company data.
YPF to boost crude exports
At the event with YPF and Equinor, YPF CEO Sergio Affronti said his company expects to be able to start exporting crude from the middle of 2023 as its production rises, led by developments in Vaca Muerta. “Today we buy 20% of the oil that we refine from third parties,” he told reporters, according to local press reports. “Our goal is to become an oil exporting company by mid-2023. We want to be self-sufficient and start exporting.” YPF, which operates three refineries, increased its shale oil production by a year-on-year 28% to 52,100 b/d in the third quarter of this year, helping to offset a 2.6% decline in conventional oil production to 153,800 b/d to increase its overall crude production by 3.5% to 209,400 b/d in that same quarter, according to company data. YPF has said that it likely will post higher-than-expected oil production growth this year as it steps up drilling in Vaca Muerta. Argentina exported an average of 55,000 b/d of crude in the first nine months of this year, with 11,000 b/d coming from Neuquen, according to data from the Energy Secretariat. That was down from a total of 74,000 b/d — and 11,600 b/d from Neuquen — in the year-earlier period, largely because an increase in domestic demand this year has meant that refiners are running more crude compared with last year when a nearly eighth-month lockdown for the COVID-19 pandemic depressed the consumption of refined products.