On June 26, 2023, Resolution No. 532/2023 of the National Energy Secretariat (“Resolution 532“) was published in the Official Gazette, approving the final text of the Contract for the Transportation of Natural Gas through the President Néstor Kirchner Gas Pipeline (the “Contract” and “GPNK“, respectively) between Energía Argentina S.A. (ENARSA or the “Transporter“) and the Wholesale Electricity Market Administrator Company (CAMMESA or the “Shipper“).

For background, it should be noted that, on one hand, Emergency Decree No. 76/2022 empowered ENARSA (with the approval of the Ministry of Economy) to freely negotiate contracts regarding transportation capacity with producers and/or shippers for the construction or expansion, in whole or in part, of the GPNK. Notably, the contracted transportation capacity will not be subject to the natural gas transportation rates approved by the National Gas Regulatory Entity (ENARGAS, for its Spanish acronym, Ente Nacional Regulador del Gas), which will apply to the uncommitted transportation capacity.

On the other hand, for background to the Contract, Resolution No. 828/2023 of the Ministry of Economy had approved its execution with the ultimate goal of replacing liquid fuels used in the generation of electricity and other industries, as well as facilitating the eventual export of natural gas.

Main provisions of the Contract:

  1. Purpose: The Shipper agrees to deliver or have delivered natural gas to the Transporter for transportation, and the Transporter agrees to receive, transport, and deliver natural gas to the Shipper or on behalf of the Shipper to whomever the Shipper designates, in quantities of cubic meters equivalent to 9,300 kcal/m3 between the point(s) of receipt at the entrance of the GPNK near Tratayén, Province of Neuquén, and the point(s) of delivery that will enable the entry of natural gas into the gas pipeline called “NEUBA II” in the TGS system, in the locality of Salliqueló, Province of Buenos Aires, in a first stage, and subsequently to the locality of San Jerónimo, Province of Santa Fe.
  2. Character of Supply: The transportation service will not be subject to reductions and will be firm and uninterrupted. It may only be reduced and/or interrupted in exceptional operational and/or natural gas supply situations.
  3. Term: The Contract will come into effect on June 20, 2023, and will remain in force and effect until June 20, 2058. The Contract will be renewed for successive periods of 1 year until either the Transporter or the Shipper expresses its intention to terminate it.
  4. Contracted Daily Quantity (CDQ): Up to 25,000,000 m3/day, distributed as provided in Article 6 of the Contract.
  5. Right of Priority: CAMMESA will have the right of priority for contracting with ENARSA for any new capacity suitable for operation, for partial quantities and up to the total additional capacities that the GPNK Project (as defined in the Contract) will contribute, in which ENARSA obtains rights to transport natural gas.
  6. Price: (i) during the first 15 years, equal to $1.023 USD/m3 per month of daily capacity, and (ii) starting from year 16, equal to $0.023 USD/m3.
  7. Assignment: The Shipper, with the prior authorization of the Transporter and the Regulatory Authority, may fully and/or partially assign the rights arising from this Agreement to the Generator(s) Agent(s) of the Wholesale Electricity Market (WEM) that it deems appropriate.
  8. Jurisdiction: The Contract shall be governed by and construed and interpreted in accordance with the laws of the Argentine Republic. Disputes may be referred to the Secretary of Energy at the administrative level, and judicially the Federal Civil and Commercial Courts of the Argentine Republic with jurisdiction in the Autonomous City of Buenos Aires is established.

 

For additional information, please contact Nicolás Eliaschev, Javier Constanzó, and/or Rocío Valdez.