Energy agreement between Argentina and Brazil extended

Energy agreement between Argentina and Brazil extended

The agreement allows the use of the Bilateral Local Currency Payment System

Argentina and Brazil agreed to extend the current Memorandum of Energy Exchange until 2025, it was reported Thursday. The document, which provides for the exchange of electric power and natural gas between both countries, was about to expire. As per its new wording, the agreement is to be automatically renewed every four years.

 Signing the new deal were Argentina’s Secretary of Energy Flavia Royón and Brazil’s Deputy Minister of Mines and Energy, Hailton Madureira de Almeida.

“This Memorandum is beneficial for both countries and is another example of the joint work we have been carrying out in energy matters in regional markets, mainly with Brazil,” Royon told reporters after a meeting with President Alberto Fernández.

She also explained that “this past winter, Brazil’s contribution in terms of electricity imports to Argentina was key to making savings possible and to enable Argentina to sustain its energy demand at a competitive price.”

Argentina’s Ambassador to Brasilia Daniel Scioli also pointed out that the purpose of this agreement was “to provide certainty, predictability…”

It also guarantees “the supply of energy in an economy that demands higher levels of energy supply in all its diversity in homes, industries and economic activity,” Scioli went on.

During a meeting at Casa Rosada Thursday, President Fernández was also briefed about the ongoing negotiations to get financing for the next stages of the President Néstor Kirchner Gas Pipeline.

Under the new deal, Argentina will continue to supply electric power and gas to Brazil. In 2021 Argentine exports of electric energy accounted for more than US$ 1 billion and so far in 2022 almost US$ 350 million of natural gas were exported.

Brazil has this year “guaranteed the maximum capacity for the provision of electric power to our country at competitive prices, which allowed significant savings in terms of the purchase of LNG imported through ships for power generation in our electric grid,” the Argentine Embassy in Brasilia said in a statement.

The agreement allows the use of the Bilateral Local Currency Payment System, implemented through the “Local Currency Payment System Agreement” between both countries, signed in September 2008.

Brazil is also expected to modernize the Garabí converter stations, the infrastructure that ensures the electric interconnection, for more than 2,200 MW, located at the end of the high voltage line that links both countries between the province of Corrientes and the state of Rio Grande do Sul. “In this way, the proper operation of the converters is guaranteed for the next decade,” the Argentine Embassy’s statement went on.

Argentina currently supplies gas to Brazil through the connection between Paso de los Libres and the Thermal Power Plant in Uruguaiana. Following this agreement, it will also be guaranteed that the Argentine network will be available to channel gas to the thermal power plant “provided that at the same time the total supply of the Argentine domestic market is ensured.”