Argentina has received a $2.3 billion bid for the supply of steel pipes for the construction of a new pipeline project. According to a webcast of the auction, the state-owned firm handling the nation's gas imports, IEASA, on March 31, 2022, received a bid to supply 656 kilometers worth of pipeline.

The proposal was made by Luxembourg-based steel pipe manufacturer Tenaris, which offered to supply the pipes at the cost of $567 million. Tenaris is part of the Argentinian-Italian industrial conglomerate Techint.

IEASA stated that the auction is a significant step toward constructing the pipeline. A source at IEASA who sought animosity over company policy disclosed that Tenaris' bid is under review, adding that the company is working fast to award the contract if it meets contract requirements.

Boosting Output

The construction of the new pipeline is under urgency to enable producers at Vaca Muerta to boost gas production. Vaca Muerta came into existence in 2012-2013 and is one of the biggest shale plays in the world.

According to data from the Energy Secretariat, the company has surged in its production, and it accounted for 52% of Argentina's total gas output (130 million cu m/d) in February.

During the most recent oil conference in Buenos Aires, Argentina's fourth-biggest gas producer, Pan American Energy's Vice President, Rodolfo Freyre, noted that if the country doesn't do anything with the infrastructure, gas production will likely hit the ceiling in the next few years.

According to EIASA, the first phase of the new pipeline project will stretch from Vaca Muerta, located in the Neuquen province, to Buenos Aires province. This phase will cost $1.6 billion, adding an extra capacity of 13 million cu m/d by 2023 and another 11 million cu m/d by 2024.

The project's second phase will stretch the pipeline to Santa Fe province at the cost of $700 million, boosting the total gas capacity to 44 cu m/d in 2025, enabling the country to reduce gas imports.