Presented by Wonjae (James) JangM.Sc. candidate in Energy and Earth Resources (‘17) | The University of Texas at AustinCommercial Department - Gas Sales (Supervisor: Lionel Caputo, M.Sc.)August 12, 2016

Assessment of Natural Gas Importation Environment of Argentina

Objective: Analyze Argentina’s Natural Gas Importation Environment and Assess Whether It Is Optimally Running

Structure1. Introduction

Assessment of Project Scope2. Body

Assessment of Current Dynamics3. Conclusion

Summary

Presentation Overview

Introduction(Assessment of Project Scope)

Importance of Natural Gas in Argentina

South America Demand ProjectionRegional NG Consumption

Importance of Natural Gas in Argentina (cont.)

Energy Mix of Argentina

Source: Sistema Estadístico Nacional, Balance Energético Nacional (BEN), 2014

Unit: %

Importance of Natural Gas in Argentina (cont.)

Where does Argentina Import NG from?

Bolivia ◦ Transportation via pipeline to Argentina

Chile ◦ Chile imports NG from its own regas terminals (two)

Quintero and Mejillones bays ◦ LNG transportation via pipeline to Argentina

LNG Regas Terminals in Argentina ◦ Argentina imports NG from 2 LNG regasification terminals

Bahia Blanca GasPort and GNL Escobar

Uruguay (under construction) ◦ Country’s first LNG regas terminal (GNL del Plata) ◦ IF completed, Argentina will import NG via pipeline

GNL Del Plata

Bahia Blanca GasPort

Escobar LNG

ARGENTINA

URUGUAY

PARAGUAY

BRAZIL

CHILE

BOLIVIA

Existing FSRU Stalled FSRU Existing gas pipelines

Mejillones LNG

Quintero LNG

Body(Assessment of Current Dynamics)

Bolivia

Key Points• Bolivian NG is the cheapest source among

all NG importation options • Currently imported at $3/MMBtu• Under the current law, Brazil has priority

(ends in 2019) Flexible term is expected to be

established for Brazil (rainfall intensity) Due to the pipeline capacity limit,

importation amount to ARG is capped unless the capacity is expanded

2007 2008 2009 2010 2011 2012 2013 2014 2015 20160

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ntity

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S$/M

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Key Points• Is Bolivia’s production sustainable?

In August 2015, YPFB announced ‘Plan Inmediato de Exploracion’ to increase reserves by investing 5 US billion dollars towards exploration activities through 2021.

Additional tax benefits (Law 319) also incentivize private companies. As a result, production from the Incahuasi discovery is expected to begin in 2016 with a peak estimated of 6.5 MMm3/d.

More gas is expected to come online from one of the largest gas projects, Azero, in 2017 (4.5 US billion dollars).

Bolivia (cont.)

Bolivia NG Consumption and Export TrendSource: James A Baker III Institute for Public Policy, Rice University

Chile

Key Points• Two existing LNG regas terminals in Chile

Quintero LNG (2009) and Mejillones LNG (2014) Totaling 19.82 MMm3/d of regas capacity (Quintero 14.36)

• In May 2016, Argentina (ENARSA) signed two agreements with Chile (ENAP)

• Supply of 4.5 – 5.5 MMm3/d for the winter months Quintero LNG: 3 MMm3/d (7.20 USD/MMBtu) * Additional 1 MMm3/d if available Mejillones LNG: 1.5 MMm3/d (6.90 USD/MMBtu)

• Contract is renegotiated every year Chile is the fine-tuning component since it is the most

expensive source of NG (But still necessary, otherwise Argentina would have to import fuel oil which costs about $10/MMBtu)

LNG Argentina

Key Points• Two existing LNG regas terminals in Argentina

Bahia Blanca GasPort (2008) and GNL Escobar (2011) Totaling 28.32 MMm3/d of regas capacity (14.16 each)

• Price: Currently the LNG price has reached $5.2/MMBtu

• There is a possibility for a third regas terminal, in case Uruguay project is not realized

Uruguay (Under Construction)

Key Points• Uruguay is a small market. It needs outside

offtakers to justify the investment In August 2013, YPF (Argentina) and ANCAP

(Uruguay) signed an MOU for 7 MMm3/d of regasified LNG to be delivered to Argentina from GNL del Plata via existing Cruz del Sur pipeline

In May 2016, Uruguay and Argentina agreed that all excess capacity at the terminal would be available for Argentina's use

• It is expected to be completed by late 2017 or early 2018

Renewable Development Plan of Argentina

Coming back to Renewable Energy

Win-Win for Both O&G and Renewable Energy

Floating wind turbines to power an offshore water injection system- DNV GL, a Norwegian company

Conclusion(Summary)

Summary Analysis

• National demand is expected to maintain current level of 124 MMm3/d due to the recent utility pricing reforms

• With increasing domestic production, total imported amount is expected to decrease from 37 MMm3/d to 34 MMm3/d by 2020

• With the new and cheaper source of NG from Uruguay, or the third regas terminal in Argentina, import from Chile will be stopped

Thank You! Q & A