Argentina Starts Gas Exports To Brazil Through Bolivia

Argentina has for the first time exported gas from its Vaca Muerta shale formation to Brazil using a set of Bolivian pipelines, in a deal between TotalEnergies, Bolivia's YPFB and Matrix Energia, the Brazilian company said.

Companies from Bolivia, Argentina and Brazil have negotiated deals for over a year, trying to secure a long-term route for Argentina's gas to reach one of Latin America's most important gas markets, Brazil.

Some 500,000 cubic meters were exported through the Bolivian pipeline on Tuesday, sources familiar with the matter said.

"The objective of the unprecedented operation is to ensure the technical viability of the logistics network," Matrix said in a statement. Contracts were signed between Total's Argentina unit and Matrix, and between Bolivia's state-run YPFB and Matrix for a tripartite operational agreement.

A major hurdle was Bolivia's initial reluctance to charge a tolling fee for the use of its infrastructure, preferring a solution that would see it buy gas from Argentina and then resell to Brazil. But negotiations improved in recent months, with several possible supply contracts identified, sources told Reuters.

The pipeline has for years carried key supplies of Bolivian gas to both Brazil and Argentina, but as Bolivia's own gas output dwindles, volumes exported have declined, creating the need for new suppliers and transportation solutions.

The arrival of Vaca Muerta gas in Brazil is a win for Brazil's President Luiz Inacio Lula da Silva, who has put providing cheaper gas to the country's industry as a priority.

If exports are sustained, they would also represent a triumph for Argentina, whose gas output is growing under President Javier Milei's market-friendly policies, opening a new source of revenue for the country, which until recently had a deficit in its energy trade balance.

The agreement includes a spot contract, so supply to Brazil can be interrupted during winter when demand in Argentina is higher, one of the sources told Reuters.

Bolivia's YPFB did not immediately respond to a Reuters request for comment.

Brazil's oil giant Petrobras PETR4.SA, another possible buyer of the gas from Vaca Muerta, is seeking contracts to import liquefied natural gas (LNG) in coming years while negotiating supplies via pipeline from Argentina, a company executive said last month.

"I think that there is a real possibility to make some deal," said Mauricio Tolmasquim, Petrobras' former chief of energy transition, referring to talks to receive Argentine gas through Bolivia.

"We are talking about what price we need that can be accepted by most parties," he added.