Manuel Chinchilla Da Silva: Oil and gas Production increases in Argentina but Energy Demand Falls

Oil production increased 3% and gas production 5.5% Total energy demand decreased 4.4%. Annual demand decreased for all categories of consumption, except renewable energy, which increased 102.6% Total oil production in Argentina increased 3% between June 2018 and June 2019, while gas production registered an increase of 5.5% during the same period, according to the Energy Trends Report of the Argentine Energy Institute General Mosconi, corresponding to the month of July 2019. (http://web.iae.org.ar/wp-content/uploads/2019/08/Informe-de-tendencia_Jul-19_IAEmosconi.pdf) The momentum of oil production was produced thanks to the 54.2% increase in unconventional production, since conventional crude oil production, which represents 83% of total production, was reduced 3.3%. In the month of June alone, total oil production in the South American country experienced an increase of 2.7% compared to the same month of the previous year.

Gas Production and Demand

History repeats itself with gas production. The increase in unconventional production, led by Shale Gas, boosted the market with an increase of 39%, while conventional production, equivalent to 61% of total production, fell 9%. In June, total gas production increased 5.9% compared to the same month of the previous year. Despite the increase in gas production, demand decreased 7.8% in May 2019 compared to May 2018, from 133 million cubic meters per day (MMm3 / d) to 122 MMm3 / d, accumulating a annual reduction of 3.3%, equivalent to 4 MMm3 / d less compared to the same period last. The external balance indicates that in the last 12 months 10 MMm3 / d less were imported while 0.8 MMm3 / d more were exported, which reveals that in Argentina there is a substitution of imports and that exports are determining both the expansion of supply as the reduction of local demand. With respect to processed oil in general, an increase of 8.8% was registered in June 2019 compared to the same period of 2018, while in the accumulated annual calculation the rise is just 0.1%. Sales of the main products obtained from processed oil such as gasoline and diesel oil report a contraction of 6.5%, while the annual calculation accounts for a decrease of 4.8%.

Only Renewable Energies Increase

Total demand for electric power in Argentina also fell in June 2019. The reduction in that case is 10.7%, while in annual terms it contracted 4.4%. Annual demand decreased for all categories of consumption. As for the local net supply of electricity, a decrease of 11.9% was recorded in June, while during the 12 months subject to this report, it decreased 5.2%, compared to the same period of the previous year. The demand for renewable energies stands out at this point, which were the only ones that experienced a positive variation in annual terms, equivalent to 102.6% in 12 months, adding 222 Gigawatt hours (GWh), of which 184 GWh corresponds to energy wind and 29 GWh with solar energy. The opposite happened with biofuels. In annual terms, there was a decrease of 17%, from 3 million 758 thousand tons to 3 million 120 thousand between March 2018 and March 2019. Regarding the monthly comparison between both months, the variation was -5 , 4%, after passing production through this type of energy from 360 thousand tons to 341 thousand tons.