Argentina seeking new Vaca Muerta pipeline work to move local gas supply

A worker walks near a pile of sand at Vaca Muerta shale oil and gas drilling, in the Patagonian province of Neuquen
A worker walks near a pile of sand at Vaca Muerta shale oil and gas drilling, in the Patagonian province of Neuquen, Argentina January 21, 2019. REUTERS/Agustin Marcarian

BUENOS AIRES, May 12 (Reuters) - Argentina's government will next week call for bids to reverse the flow of natural gas on a major pipeline designed to transport Vaca Muerta production to the north and center of the country, Economy Minister Sergio Massa said on Friday.

Vaca Muerta is a massive shale formation in western Argentina seen as key to boosting the South American country's gas supplies and lessening the need for pricey imports.

Interested firms will be able to bid on work converting existing pipelines that carried imported gas so that they now transport growing domestic supplies in the other direction.

Work on the Northern Gas Pipeline is set to be completed next year while saving $2 billion annually in energy imports, replacing supplies from Bolivia where production has been faltering.

Massa noted that the pipeline project will eventually allow exports to northern Chile, central Brazil and Bolivia.

"This will make it possible to begin thinking of Argentina as an energy exporter," said Massa, adding the project will also help supply the mining sector and northern Argentina at prices six times cheaper than current costs.

Argentina is looking to ramp up Vaca Muerta production, which analysts believe will help reverse a longstanding energy deficit.

The development of Vaca Muerta, which has the world's second-largest shale gas reserves, comes as central bank reserves have dwindled as the economy slumps due in large part to triple-digit inflation.

A core stretch of the pipeline connecting Vaca Muera with Buenos Aires province is set for completion in 40 days, while a second leg will reach Santa Fe province next year.

"Today, we are gaining energy sovereignty," President Alberto Fernandez proclaimed during a ceremony touting progress on the pipeline.

The outgoing leftist leader hailed total energy savings of between $2 billion and $3 billion already achieved.

Reporting by Eliana Raszewski; Writing by Sarah Morland; Editing by David Alire Garcia and David Gregorio

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