BP clinches big natural gas deal with Argentina

ARGENTINA’S state-run energy firm YPF has picked BP to supply the bulk of its liquefied natural gas (LNG) needs in both 2014 and 2015 following a major recent tender, a source with direct knowledge of the deal said.

South America’s third-biggest economy last month launched its annual tender to secure approximately 5.57m tonnes of LNG over the 2014-2015 period to help cover its energy needs.

BP is to supply around 40 of the 48 cargoes sought by YPF for delivery into the Bahia Blanca import terminal, the source said.

Gazprom Marketing & Trading is set to bring in a further five cargoes to the terminal, 400 miles south of Buenos Aires, and Norway’s Statoil will deliver the final three, trade sources said.

Argentina will pay around $15 per million British thermal units (mmBtu) for deliveries in 2014, and a premium of around $10 per mmBtu above the US Henry Hub gas price for deliveries the following year, a source said.

Gazprom, Statoil and YPF declined to comment.

The state-run firm also picked Spain’s Gas Natural Fenosa (GNF) to deliver around 2.7m tonnes of LNG into the country’s other terminal at Escobar on the Parana River.

The award was given despite an Argentine judge’s ruling last week that banned GNF from participating in the tender due to a potential conflict of interest.

It remains to be seen whether subsequent court actions could overturn the award to GNF, traders said.

Fuel imports have been growing in Argentina due to a persistent fall in local production and an increase in demand, especially for gas.

Argentina’s fuel imports rose 31.9 per cent in August 2013 from the same month last year.

Led by liquid natural gas purchases, imports totalled $942m, according to Argentine government data.