Argentina is a very dynamic country regarding its capacity to react to new investments. This has been limited in the past few years due to several factors, but now we are seeing a reactivation, which is very good news.

Carlos BACHER CEO and president TECHINT ENGINEERING & CONSTRUCTION

Make way for gas

March 27, 2017

TOGY talks to Carlos Bacher, CEO of Techint Engineering & Construction (Techint E&C). Techint E&C has 70 years of experience in the oil and gas industry, having provided EPC services for several pipelines, refineries, plants and other oil- and gas-related facilities worldwide.

Techint began operations in Argentina with its work on the San Martín gas pipeline nearly seven decades ago. The company has worked on more than 900 projects in the country. Other domestic energy projects that Techint E&C has been involved in include the Profertil fertiliser plant, 18 trans-Andean pipelines and the Güemes and Luján de Cuyo thermoelectric power stations.

• On power generation needs: “Argentina needs to invest in its power sources, wherever they might come from. There is room to grow. We are keeping an eye on potential opportunities.”

• On Argentina’s EPC segment: “Argentina is a very dynamic country regarding its capacity to react to new investments. This has been limited in the past few years due to several factors, but now we are seeing a reactivation, which is very good news. Argentina has companies that can handle these new challenges and can seize new opportunities.”

• On refining needs:
“Argentina is going to need to expand its refining capacity, but this will depend on profitability. There’s a need to optimise the “Argentinian cost,” including labour unions, tax issues and other costs that make the country more expensive to potential investors than other countries.”

Besides touching on these topics, TOGY talked at length to Carlos Bacher about his company’s activities in Argentina and developments in the country’s midstream and downstream sectors. Most TOGY interviews are published exclusively on our business intelligence platform TOGYiN, but you can find the full interview with Carlos Bacher below.

There seems to be more demand for engineers than available professionals worldwide. As president of the Chamber of Engineers, how effective have training efforts been?
I think the quality of training has decreased of late. Over the past 15 years, this segment has taken a blow. We still need more engineers and technical specialists, as well as people willing to teach and share their know-how, which ties in with our company’s vision.
To that end, all of Techint’s non-profit activity is very focused on education and on promoting engineering at an early stage before reaching college. Our group works in construction and in the oil and gas industry. We are a company of engineers by definition.

How is the Argentina’s EPC sector developing?

Argentina is a very dynamic country regarding its capacity to react to new investments. This has been limited in the past few years due to several factors, but now we are seeing a reactivation, which is very good news. Argentina has companies that can handle these new challenges and can seize new opportunities.

 

What is the importance of the Northeast Argentine Gas Pipeline?
This project will be strategic for the country’s northeast gas supply. It depends a lot on the availability of Bolivian gas, which is related to Brazilian consumption.
Once Brazil develops the pre-salt, Bolivian gas will be coming to Argentina. It’s an infrastructure investment that requires long-term perspective. Techint Engineering & Construction won and executed a segment of the pipeline in a licensing process, and that’s already finished. There were six segments in total.

What is the current state of gas and oil pipeline networks and what are the opportunities for EPC companies in this sector?
Once Argentina develops Vaca Muerta, it is going to need a transport network; there are even talks about the development of another pipeline in Neuquén. Also, gas treatment plants will be needed and they will require other pipeline networks. These kinds of wide-diameter pipelines for gas or oil are one of our core activities and have been a key development factor in Techint Engineering & Construction experience.

How has Techint E&C’s presence in unconventional fields evolved in Argentina?

Argentina has a tremendous potential for developing shale gas in Vaca Muerta. For shale gas and oil, we work on the logistics and on a more industrialised method of exploitation, developing treatment plants, infrastructure for frac water, power generation projects, etc. Once Vaca Muerta reaches a certain level of complexity in its development, we have learned from US sites that the need for industrialising production will increasingly grow.

What is your perspective on power generation requirements in Argentina?
Argentina needs to invest in its power sources, wherever they might come from. There is room to grow. We are keeping an eye on potential opportunities. There are regions where we are active with thermal and hydroelectric plants. We built the last two in the country, which were medium sized to small. We want to take part in future projects. In renewables, solar or wind, the big chunk goes to suppliers for panels or turbines. We are looking for a project of the right size where we reach a critical mass.

How will the downstream and refining sectors evolve in Argentina?

We have worked with YPF for decades and we intend to keep doing so. Some of YPF projects have been slowed down; they are reviewing their refinery investment plans. We did the engineering for the expansion of the refinery at La Plata, and we expect to take part in the expansion if they decide to go on.
Argentina is going to need to expand its refining capacity, but this will depend on profitability. There’s need to optimise the “Argentinian cost,” including labour unions, tax issues and other costs that make the country more expensive to potential investors than other countries. When these costs turn profitable, investments will happen, but right now there are still challenges to face.

Argentina has two FSRUs. What is the potential of setting up a large onshore regasification plant now that the efficiency of these FSRUs has been proven?
In the end, a fixed plant with storage is more viable. FRSUs have flexibility but with a future of being a gas-importing country on the horizon, an onshore regasification plant would make sense and be more profitable. Once prices go up again in two to three years, those countries with receptive capacity and large regasification plants will be a step ahead.

What will be the impact of the changes made to Argentina’s economic policy over the past year?
We are very optimistic. We just went through a phase of very little private investment in the economy at large, although there was some investment by the state. The new administration has a different vision and aims for different goals. We are getting ready for it, checking where the problems are and how we can be of support.

For more information on Techint E&C in Argentina, such as its work on the Northeast Argentine Gas Pipeline, see our business intelligence platform, TOGYiN.
TOGYiN features profiles on companies and institutions active in Argentina’s oil and gas industry, and provides access to all our coverage and content, including our interviews with key players and industry leaders.
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