24 November 2015

Natural gas as a key factor to promote regional energy integration

  • In order to analyze the potential of natural gas in the optimization of the energy matrix, and taking into account that several countries in the region are developing infrastructure and liquefied natural gas projects, the Regional Association of Oil, Gas and Biofuels Sector Companies in Latin America and the Caribbean (ARPEL) held a Seminar on "Development of natural gas markets" at the end of October in Santiago, Chile.

    The event was attended by more than 150 participants of the regional energy sector and there were prominent speakers from leading companies, consulting firms and institutions in Latin America: CIER, ENAP, Argus Media, IHS, Repsol, GNL Mejillones, YPF, Galileo, Randall Gas Technologies, Pluspetrol, Gas Natural Fenosa, ECLAC, Wood Mackenzie, ACERA, Bain & Company, YPFB and Generadoras de Chile.

    During the opening ceremony, the General Manager of ENAP, Marcelo Tokman, highlighted the importance of this event for dialogue on the development of the energy sector in the region. "I believe that this is an ideal forum to discuss the role of natural gas in the energy matrix, to exchange views with other players and to generate new business opportunities".

    Tokman referred to the current scenario of the natural gas market in Chile and highlighted the role of the state in the development of the energy sector of this country. In this context, he said: "we face a very special time, with a lack of generation projects and a clear need to diversify energy sources with an emphasis on cleaner technologies. In this scenario, ENAP has proposed to develop new combined cycles based on natural gas".

    Tokman also mentioned the contribution of natural gas to the energy matrix as a source of clean energy, and its contribution to the joint development of renewable energies. "It is the ideal complement for generation projects based on unconventional renewable energy in the Chilean system in the short and medium term".

    The Executive Manager of Gas and Energy of YPF, David Tezanos, who participated in the dialogue on energy complementarity and integration, stated that "regional integration obviously brings efficiencies to the energy system, there are complementarities and several factors that make this way of thinking is best for us and for all those who live in our countries", and added that "in fact, when an energy integration model is developed, the best possible energy model is developed".

    The great development of LNG at both the global and regional level was another of the topics addressed during the Seminar. 

    According to the experts, a new market dynamic is being developed, with more abundant supply, which will tend to relax purchase conditions and reduce prices.

    "New liquefaction and gasification technologies are significantly reducing the costs of these investments, also replacing the need for capital investment with operating expenses, which provides more flexibility for the investor and reduces the risks associated with the investment," said José de Sá, a partner at Bain & Company.

    In the discussion about complementarity between renewable energies and natural gas, the International Coordinator of Generation of CIER, Oscar Ferreño, stated that "unconventional renewable energies are intermittent, or at least inherently variable and random, which makes the resource unmanageable. Therefore, they must be necessarily complemented with manageable and versatile sources. Due to its characteristics, natural gas is the ideal complement for this type of energy when there are no hydroelectric power stations".

    Ferreño said that wind energy is very variable in the very short term, but that in longer time periods, for example a year, it is very stable and therefore compatible with typical contract models of natural gas as a take-or-pay volume, this being another important factor of complementarity between both types of energy.

    The main issues of the Seminar on "Development of natural gas markets" organized by ARPEL were: Current situation and prospects of the natural gas and energy markets in the region; Small Scale LNG and Mini LNG; Development and future viability of natural gas in transport; Opening of LNG terminals in Chile; The experience of ENAP on the Aconcagua refinery; Regional dynamics of natural gas and energy markets; Complementarity between renewable energy and natural gas; Lessons learned from natural gas exporting countries; and Energy complementarity and regional integration.

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