A conglomerate owned by one of Argentina's richest oil families is making the first major investment in the global clean energy transition.
Corporación América International plans to build a 100 million euro ($112 million) ammonia plant in Burgos, Spain, that will be powered by solar and wind power, the oil and gas holding company said. Hugo Journekian, CEO of the production company Compania General de Convertibles, said in an interview. .
The “green” ammonia, produced using hydrogen extracted from water in a process powered by renewable energy, will be sold to livestock feed manufacturers from 2027.
For Argentina-based Corporación América, the energy transition remains an unresolved challenge. The Argentine government is keen to make the most of Patagonia's shale oil resources.
“Humanity is still searching around the world for the best solution, or combination of solutions, to the problem of decarbonizing the economy,” Arnekian said, adding that from synthetic fuels to thermal power generation with carbon capture. Until then, the list is wobbly. “We want to play an important role in that process.”
Corporacion America was founded by Eduardo Younekian, a 90-year-old billionaire who has navigated a changing global economy and local politics for at least 50 years. Recently, he has handed over management rights to the next generation, including his nephew Hugo (40). The family made its fortune in textiles, communications and airports, before adding energy to its portfolio.
The move into hydrogen comes at a time when oil companies around the world are exploring how best to bring their businesses into a new era of cleaner fuels and electrification. Demand for fossil oil has already peaked, but energy giants are betting on natural gas to fill the gap.
Corporación América's change of direction comes just 10 years after it entered the oil and gas business with the acquisition of CGC, one of Argentina's largest drilling companies. Although the company has been producing biodiesel for many years. Arnekian said the company could reduce its stake in CGC by 70% after selling convertible debt to petrochemical maker Dow Chemical.
Still, Eunekians are far from curtailing their fossil activity. After acquiring new fields in 2021, CGC plans to drill a record number of wells this year, including three horizontal wells in Palermo Aike, a potential new shale frontier for Argentina.
Youunekian said CGC wants to take its first steps into hydrogen business in Europe, as the market for building and producing renewable energy farms is more developed than in Latin America. Argentina's vast coastline and Patagonian plains are one of the best places in the world to convert wind energy into electricity. Several companies are interested in developing wind farms to produce hydrogen.
“The strategy is to have an initial pilot experience in Europe so we can understand the transition process,” Arnekian said. “When the time comes for large-scale projects to become viable, we will be able to leverage Argentina's resources.”
Other highlights from the interview:
- CGC aims to take advantage of the country's low interest rates to shore up its finances ahead of Argentina's general elections starting next month, and the proceeds from the bond sale to Dow will be used to repay debt due in 2024. It is planned to be used for
- The deal also gives Dow the option to purchase CGC's gas for petrochemical plants. In return, CGC will get an option to buy gas produced by Dow in the Vaca Muerta shale formation.
- Regardless of who wins this year's presidential election, Yurnekian believes there is consensus across the political spectrum to support Argentina's energy sector, given its potential to generate export dollars.
- The pace of growth will depend on how and when the next administration improves macroeconomic and oil investment rules.
- CGC is not considering developing an LNG export project as it is focused on pipeline gas first to Chile and then to Brazil via Bolivia.
– The Times/Bloomberg
