Argentina at the G7 summit: “Supplying the world with LPG”

In the global energy crisis, Argentina brings its shale gas deposits into play. But the residents of the region complain about the consequences of fracking. And there is a problem with the infrastructure.

This used to be a quiet, secluded and peaceful spot, says Andrés Duran, but that’s over. The earth trembles, the water is polluted, machine noise all day long.

Duran drives his car through the barren steppes of Patagonia to his village Sauzal Bonito. It is only a few kilometers away from Vaca Muerta, the name of Argentina’s largest shale gas deposits.

They are the second largest deposits in the world. It is funded by fracking. Since then, the houses in Sauzal Bonito have developed deep cracks.

Cracks in house walls

In the case of Vicente Zenon Zapata, it extends over the entire facade. The small farmer complains that experts should have long ago investigated whether his house had to be demolished or whether there was another solution.

The reason for this is earthquakes, which have recently been occurring more and more frequently. And, if the government in Buenos Aires, a thousand kilometers away, has its way, funding is now to be intensified due to the Ukraine war.

During his visit to German Chancellor Olaf Scholz in May, President Alberto Fernandez brought up his country as an alternative gas supplier. Argentina has a lot to offer that the world needs in the new global situation, Fernandez said at the time: “We are large food and energy producers, we have the second largest shale gas deposits in the world. We want to use them to fill the world with liquid gas take care of.”

Foreign exchange urgently needed

For Argentina, on the other hand, which has been in a severe economic crisis for years, the much-needed foreign currency would be brought into the country – a win-win situation if there weren’t a fundamental problem.

Alejandro Rebossio, a business journalist and author of a book on vaca muerta, says Argentina could double its funding in five years. But the infrastructure is missing to transport the gas and crude oil.

First of all, investments in pipelines worth millions are required to bring the gas to ports and then to plants that produce liquid gas from it. “When President Fernandez says Argentina has a lot to give, he means: We have the gas, we need your investments in order to be able to export it.”

Ecology secondary for the time being

Because up to now, the crisis country Argentina has had to import expensive gas itself, at least in winter, in order to cover its own needs. The fact that funding in Vaca Muerta should be further expanded is therefore considered a political consensus – across the political spectrum. Although there are different views as to whether this should happen with more or less participation by the Argentine state.

The ecological consequences hardly play a role in the discussion, observes Rebossio. Anyone who lives right next to a conveyor system is of course against it, “but that’s a minority. The majority wants to be able to take a hot shower”.

South America more in focus

In principle, South America should move more into the focus of energy supply for Europe because of the war against Ukraine, believes Rodrigo Leão from the Brazilian oil and gas institute Instituto de Estudos Estrategicos de Petrolio e Gas.

The oil and gas industry is now increasingly looking to South America to replace previous imports from Russia. “Western supply chains are being diversified and may soon include Venezuela, Brazil and Argentina.”

Persistent violent earthquakes

So far, the residents of Sauzal Bonito have only had disadvantages from the increased funding. Since April, they have registered 35 tremors, the most violent measuring 4.5 on the Richter scale.

For the time being, however, they have nothing from the gas itself. Vicente Zenon Zapata says they lived there though next to the second largest shale gas field in the world – “but we don’t have a connection ourselves and are dependent on expensive gas cylinders”.