Buenos Aires, February 9, Mrs. Procuradora del Tesoro Dra. Angelina Abbona S / D

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2 Buenos Aires, February 9, 2015 Mrs. Procuradora del Tesoro Dra. Angelina Abbona S / D I write in my capacity as MINISTER OF FEDERAL PLANNING, PUBLIC INVESTMENT AND SERVICES, to submit the report duly requested with respect to the energy situation during the terms in office of President Néstor Carlos Kirchner and President Cristina Fernández de Kirchner. In this respect, it should be pointed out that since year 2003 and after making an assessment of the situation of the energy system it was decided to carry out what was called the NATIONAL ENERGY PLAN [PLAN ENERGÉTICO NACIONAL], launched in year 2004 by President Néstor Kirchner, then continued and extended during the two terms in office of President Fernández de Kirchner. That Plan was meant to give a response to the shortcomings of the three central areas of the energy sector (gas, oil and electrical power) and its main purpose was focused on substantially improving and extending the existing infrastructure; removing the restrictions that limited the transportation, especially those related to the high voltage power transportation; resuming and terminating those projects that were paralyzed, starting up new projects to extend the energy supply, and ensuring the universal access with accessible prices to public services. Thus, different works were announced in the electric power areas (generation and transportation areas) and in the gas transportation area, with the aim to improve the general conditions in which the system was received. All this took place within the framework of an economic emergency declared by Law No and complementary legislation, and within the renegotiation process of the Public Services Agreements conducted within the framework of UNIREN, given that providers of public services were not making the necessary investments for the maintenance and expansion of such public services. In this context, the MINISTRY OF FEDERAL PLANNING, PUBLIC INVESTMENT AND SERVICES implemented, 11 years ago, a major public works plan which amounted to 93,000 million of Argentine pesos out of which 78% was provided by the Federal State. As regards the electrical system, these investments allowed adding 11,000 megawatts including the termination of significant works to put into operation Yacyretá and Atucha II power stations, both of which had been paralyzed for more than 14 years, and which provide a strong diversification of the electric power matrix.

3 Likewise, 5,500 kilometers of extra-high voltage electric power transportation lines were developed with the view to joining them to the Sistema Argentino de Interconexión (SADI), therefore adopting a federal criterion that allowed the addition of Chubut, Santa Cruz, la Rioja, Formosa, Salta, the interior of Chaco, Santiago del Estero, Jujuy, San Juan and the south of Mendoza to the interconnected electrical power system. These works allowed the system to operate under quality parameters with the purpose of facing an historical expansion process of the electric power demand, from a consumption peak of 14,359 to 24,034 megawatts, a 67% increase while the yearly residential consumption increased by 90%, thus allowing almost 5 million residential users to be part of the national power network. As regards gas transportation, as affirmed from the commencement of the National Energy Plan, the restriction to the preexistent transportation capability had to be improved. To date, 2,790 kilometers of main networks have been developed, including the Segundo Cruce del Estrecho de Magallanes aim at transporting gas from Cuenca Austral and from Juana Azurduy s gas pipeline in order to consolidate the energy integration with the Plurinational State of Bolivia, as well as the installation of 292,000 horsepower in Compressed Gas Plants, works that allowed the expansion of 30% hydrocarbon transportation capability. Since 2003, more than 2,200,000 new users could have access to the Argentine natural gas network, and the demand of Natural Gas in the last 10 years had an increase of more than 40%. It would not have been possible to cope with such increase with the gas transportation existing in Furthermore, different policies has been developed as from 2007 in order to follow the increase in the industrial and residential gas demand in face of production stagnation and the decrease of reserves of such product due to lack of investment by the private sector. The Natural Gas reserves also show a similar trend. The lack of gas was satisfactorily resolved thanks to two external sources, on the one hand, the imports from the Plurinational State of Bolivia and, on the other hand, through shipments of Liquefied Natural Gas (LNG), which had to be regasified and then injected to the Argentine Gas Transportation system. In 2014, on average, 33,900 million volume/per day of natural gas were imported, out of which 48,3% was provided by Bolivia and the rest was LNG provided by different international suppliers. It should be highlighted that the gas imports from Bolivia are recorded since 2004, while LNG is recorded since 2008 with the startup of the regasification plant in Bahia Blanca. Such imports are currently maintained and a new regasification plant in the city of Escobar was set up. There are many countries that supply the LNG, but the main ones are

4 Trinidad and Tobago, Qatar and Nigeria, which amount to 80% of the total imports since On the other hand, since 2008 a number of programs called Refino Plus, Petróleo Plus and Gas Plus have been developed, which were added to the one existing called Energía Plis. The purpose of such programs was to encourage suppliers to improve and to increase the levels of domestic gas production and oil while improving the refining capability. Then, in May 12, Law No was enacted with the purpose of reaching hydrocarbon sovereignty. Besides it declares the achievement of hydrocarbons self-supply as well as its exploration, industrialization, transportation and marketing of national interest and as a principal objective of the Argentine Republic; all this with the aim of ensuring the economic development with social equity, employment creation, competiveness increase in different economic areas, and the equitable and sustainable growth of provinces and regions. Furthermore, this law also enhances the strategic decision to renationalize YPF S.A. company, the main energy company of our country, through the recovery of control of the majority of the shares by the Federal State. According to data provided by the Energy Secretariat of the Federal State, after the enactment of Law No , oil production carried out by YPF increased 3.1%; in 2013 it increased by 3%, and in 2014 this figure reached 8.9%. The same is true as regards gas production, which after a decrease of almost 10% recovered in 2011 and in 2014 increased by 12.5% as compared to All this could be done due to an investment effort made by YPF S.A. In 2012, there were only 29 drilling equipment against the 75 currently in operation, that is to say, since the nationalization 46 additional equipment were added. This opened the possibility to increase the drilled wells by 18.7% in 2014 for such company compared to 2013 and by 60% compared to Aside from the United States, Argentina is the only large-scale producer of nonconventional hydrocarbons though it has only one non-conventional oil field in Loma Campana ; this development arises from an agreement between YPF and Chevron which represents only 1% of the area of Vaca Muerta. The investment in the project Loma Campana amounts to more than USD3,100 million, 4,500 jobs, 245 active wells, 25 active drilling equipment, a current production of 33,000 oil barrels per day, which will reach 75,000 daily oil barrels in 2018 and 3 million volume/per day of gas. Moreover, the exploratory area of the company has also had achievements and obtained new hydrocarbon findings, both conventional and non-conventional ones.

5 On the other hand, in January 2013 by Resolution No. 1/2013 from the COMMISSION OF STRATEGIC PLANNING AND COORDINATION FOR THE FEDERAL PLAN OF HYDROCARBON INVESTMENT, [COMISIÓN DE PLANIFICACIÓN Y COORDINACIÓN ESTRATÉGICA DEL PLAN NACIONAL DE INVERSIONES HIDROCARBURÍFERAS], the Encouraging Program to the Exceeding Injection of Natural Gas was created. Among the main purposes of this law are: the reduction of the gap between production and gas consumption by two ways: on the one hand, through the incentive to the companies belonging to the oil industry so as to increase the production of natural gas in the short term with the purpose of reducing the imports of said hydrocarbon; and, on the other hand, by encouraging investment in exploration and exploitation in order to have new oil fields that allow the recovery of reserves in the middle and long term. That program ensured a price of USD 7,500 MMBTU for those that increase their production levels. At the same time, such program was extended in November of the same year by Resolution No. 60/2013 of said Commission to include companies with a reduced injection. The referred to measures, together with the recovery of YPF, positively reversed the declining trend in the production levels of gas and oil in the country, that are currently stable, and improved the expectations regarding its reserves. The total verified reserves (oil + gas), according to the Argentine Energy Secretariat [Secretaría de Energía de la Nación] as at December 31, 2013, reached 615 Equivalent Tons of oil, which implies a growth by 1.3%, compared to 2012 levels. The declining trend of more than 10 years was, thus, halted. On the other hand, as to oil production, Argentina is not only self-supplied for domestic consumption, but also during the period under analysis has exported oil known as heavy and some of its derivatives. Considering the statistics provided by the Argentine Energy Secretariat [Secretaría de Energía de la Nación], besides the imports historically registered from Bolivia through Refinor (oil that after being locally processed is exported back to Bolivia, as gasoil), accounting for less than 1% of total processed crude, it must be highlighted that only one imported cargo has been registered in 2014, and its volume is clearly below the exported balances. In this sense, it should be noted that Argentine refineries are highly dependent on light oil (around 34º API), produced in the country under the Medanito denomination. Such production, originated mainly in mature fields, has decreased during the last years and, on the other hand, even though it is not enough yet to compensate the referred drop,

6 there is an emerging project of unconventional exploitation of hydrocarbons, shale oil mainly. Due to a given refinement capacity, and the referred growth in demand, measures to compensate such exponential growth became necessary. The adoption, with great success, of the Biofuels Program [Programa de Biocombustibles] allowed the oil to be mixed at 8% with Bioethanol locally produced, made from sugar cane and maize, and gasoil at 10% with biodiesel, also locally produced, extracted from soy bean manufacture. The remainder of the automotive consumption not covered by locally produced oil, gasoil and biofuels was satisfied with imports. During 2014, imported fuel meant 5.5% of the overall local demand, and 14.9% in the case of gasoil. Hence, of the total demand of fuels and gasoil in 2014, only 11.4% were imported. Under that program, in the context of Resolution No. 1/2014 issued by the Commission of Planning and Strategic Coordination of the National Plan of Hydrocarbon Investments [Comisión de Planificación y Coordinación Estratégica del Plan Nacional de Inversiones Hidrocarburiferas], the import of a cargo of crude oil was registered. That cargo meant only 0.5% of the total amount of crude oil processed during that year. Also, the volume of that cargo was 151,562 m 3 and came from Nigeria due to the quality requirements of the program. Regarding fuels, demand did not follow an exceptional pattern to the mentioned process of steady growth in the power sector. Regarding automotive fuel consumption, demand increased from 2.6 million m 3 in 2003 to 8 million m 3 in 2014, entailing a growth of over 200%. In the case of gasoil, demand increased from 10.6 million m 3 in 2003 to 13.4 million in 2014, entailing a growth of 27%. All this was undoubtedly the consequence of the economic expansion of those years and because the automotive fleet doubled its size. Due to a given local refinement capacity, and the mentioned growth in the demand, imports of fuel and gasoil for automotive consumption became necessary. In the year 2014, imported fuel only accounted for 5.5% of the total demand, and imported gasoil accounted for 14.9% of the total gasoil demand. Hence, of the total demand of fuel and gasoil in 2014, only 11.4% was covered by imported fuels. Regarding oil derivatives imported for power generation, besides gasoil, fuel oil has been imported in the context of the international agreement entered into with the Republic of Venezuela, because of the Venezuelan prices and quality, which are better than similar national products, the financing terms granted by that sister Republic, and the fulfillment of international exchange agreements that have allowed the Argentine Republic to increase its exports to Venezuela by 1000%. Consequently, that decision is grounded on a strategic policy of foreign affairs and not on the lack of a product.

7 All the referred information is available online on different sites, but generally the information contained in the present report is based on the official site of the Secretary of Energy [Secretaría de Energía] and the reports of CAMMESA, ENRE and ENARGAS, the official organs in charge of collecting and systematizing the information. From a strictly legal perspective, the energetic emergency was never declared by the Federal State during the period under analysis, even though it could have done so in 2003, due to the conditions in which the public administration and public services contracts were received by the new administration. Finally, it must be highlighted that the Energetic National Plan [Plan Energético Nacional] allowed an accumulated increase in the economic activity by 90% since It is still ongoing today and during this year it will execute large scale projects. Some of these projects already are, or will be within the next months, in execution and will represent a milestone in the Argentine energetic policy. Among other examples, we could mention the Pipeline of Argentine Northeast [Gasoducto del Noreste Argentino] that includes 4,144 km of trunk pipelines and pipeline approach, and requires an approximate investment of $ , being under execution stages I and II. This project will definitely incorporate the Argentine Northeast to the natural gas network, incorporating 168 municipalities in the region. Additionally, the Plan contemplates the hydroelectric high dams Kirchner and Cepernic, in Santa Cruz, of 1,740 megawatts altogether, the largest hydroelectric project built by the Argentine Republic by itself, without any other country as an associate (like the Yacyretá project, developed with Paraguay, and the Salto Grande Project, developed with Uruguay), creating 7,000 employments; the Plan also contemplates the construction of the Chihuido Dam in Neuquén, of 637 megawatts. Regarding the former high dams, the past February 4 the order for the initiation of the works was signed and the first trench of the loan granted by the People s Republic of China was disbursed in the context of the Integral Strategic Alliance, marking the definitive commencement of the works. Further, the joint construction of the IV Nuclear Power Plant of 700 megawatts is under negotiation with the People s Republic of China (heavy water), which may include 70% of national components; and the V Nuclear Power Plant (soft water) of 1,000 megawatts is under analysis, which will represent the entry of the Argentine Republic to enriched uranium technology. With the execution of all the mentioned works, the Argentine Republic will ensure a safe supply of power to its entire territory and will also diversify the energy matrix with a broader employment of Clean Energy that is environmentally safe and ensures a greater protection against the volatile world s economy and price fluctuations. As a general conclusion, it can be affirmed that:

8 THERE IS NO ENERGY CRISIS BECAUSE THE SHORTCOMINGS IN INVESTMENT WERE ADDRESSED THROUGH A MIDDLE AND LONG TERM PLAN. THERE ARE NEITHER ENERGY URGENCIES NOR EMERGENCIES BECAUSE THE PLAN WAS DESIGNED AND FULLFILLED AS IT EVOLVED. ARGENTINA CURRENTLY IMPORTS ONLY 12% OF ITS ENERGETIC CONSUMPTION. OTHER COUNTRIES OF THE REGION, AS BRAZIL, IMPORT NO LESS THAN 20%. IN OTHER CASES, LIKE CHILE AND URUGUAY, THE ENERGY IMPORTS ARE ABOVE 60%, AND IN EUROPE THE AVERAGE IS ABOVE 45%. TAKING INTO ACCOUNT THAT ARGENTINA VIRTUALLY DOUBLED ITS POWER DEMAND AND ONLY IMPORTS 12%, IT IS CLEAR THAT A LARGE PART OF THAT EXPONENTIAL GROWTH IS SATISFIED WITH LOCAL POWER PRODUCTION. REASONS WHY, UNDER NO CIRCUMSTANCES, COULD THE OIL BE BOUGHT FROM IRAN: o IT DOES NOT MEET THE QUALITY PARAMETERS OF CRUDE OIL AS REQUESTED BY LOCAL REFINERIES BECAUSE OF ITS HIGH CONTENT OF SULPHUR AND ITS DENSITY. o IRANIAN OIL IS INFERIOR TO THE QUALITY OF THE OIL PRODUCED IN CERTAIN ARGENTINE BASINS, WHICH EVEN PRODUCE BALANCES FOR EXPORT. o OF THE TOTAL PROCESSED OIL, LESS THAN 1% IS IMPORTED AND IT HAS TO BE LIGHT, WITH SIMILAR FEATURES TO THOSE OF THE MEDANITO BARREL FROM NEUQUEN. o THERE IS NO COMMERCIAL-SCALE TO CONSIDER IT RELEVANT (VERY LITTLE IS IMPORTED AND, FOR THE FIRST TIME, IT WAS IMPORTED IN 2014 FROM NIGERIA). IRAN DOES NOT EXPORT OIL-DERIVATIVES THAT ARGENTINA REQUESTS TO SATISFY CERTAIN DEMAND NEEDS. THANKS TO THE ENERGY POLICY OF THE PRESIDENT, CRISTINA FERNÁNDEZ DE KIRCHNER, YPF IS REACHING NEW PRODUCTION RECORDS. YPF INCREASED ITS PRODUCTION BY 3.1% IN 2013 AND BY 8.9% IN THE SAME APPLIES TO THE GAS PRODUCTION, THAT AFTER FALLING BY 10% IN 2011 BEGAN ITS RECOVERY AND IN 2014 INCREASED BY 12.5%, COMPARED TO THE PRODUCTION OF THE PERFORMANCE OF YPF POSITIVELLY REVERSED THE DECLINING TREND IN THE OIL PRODUCTION BY 25% AND IN THE GAS PRODUCTION BY 84%.

9 THE ENERGETIC PLAN DEVELOPED BY NESTOR AND CRISTINA KIRCHNER ENABLED THE INCORPORATION OF 10 PROVINCES AND REGIONS THAT, HISTORICALLY, WERE ISOLATED, 5 MILLION HOUSES TO THE POWER NETWORK, 2.2 MILLON HOUSES TO THE GAS NETWORK AND ALLOWED THE INDUSTRY TO ACHIEVE ITS LARGEST DEVELOPMENT IN ALL HISTORY, PLUS THE RECOVERY OF YPF WERE THE TWO DECISIONS THAT MADE IT IMPOSSIBLE FOR A CRISIS TO EXIST IN THE SYSTEM AND ALLOWED ARGENTINA TO HAVE THE MOST IMPORTANT ECONOMIC GROWTH IN ITS HISTORY. Kind regards, I remain available should it be necessary for me to expand the present report. [SIGNED] Arq. Julio Miguel de Vido Ministry of Federal Planning, Public Investments And Services