© Reuters.
By Marianna Parraga
HOUSTON (Reuters) – Argentina is in a “very bad” economic situation, but is on the right path to encourage energy investment and remove its fiscal imbalances if a package of reforms proposed by President Javier Milei passes the Congress, CEO of producer Tecpetrol said on Tuesday.
Argentina this year has begun cutting planned imports of liquefied (LNG), a move seen as a first step to reduce the country’s fiscal deficit, Tecpetrol CEO Ricardo Markous said at the CERAWeek by S&P conference in Houston.
Building out needed infrastructure for exporting some of Argentina’s natural gas as LNG should be the long-term solution, Markous said.
However, Argentina’s senate last week rejected Milei’s sprawling “mega decree” of economic reforms, a major blow to the libertarian leader’s austerity agenda. That plan included removing long-standing energy subsidies to solve a balance of payments deficit mainly caused by energy imports, including gas from Bolivia and liquefied natural gas (LNG) cargoes.
At least two large projects to produce and export LNG in Argentina, one involving Malaysia’s Petronas and another by Tecpetrol, are under discussion.
Energy executives have said the reform is needed to secure fair export prices and an adequate return on their investment. A special bill for mega projects included in the package would secure fiscal conditions for the LNG developments, and for privately-financed energy projects aimed at boosting output and exports, and building infrastructure, especially much needed pipelines.
“The politicians (in Argentina) are realizing that the best way to monetize the gas reserves is through LNG,” Markous said.
Markous said some shale gas plays in Argentina are more competitive in terms of production costs and speed than some U.S. regions, but amid the current economic situation and the fiscal measures to come, a further reduction in production costs is needed.
If Milei’s reforms are approved, Argentina could see a surplus in its energy trade balance this year, compared with large deficits in previous years, while oil production could reach up to 1.5 million barrels per day (bpd) in the coming years from about 700,000 bpd last year, Markous added.
