A conglomerate owned by one of Argentina’s richest families with oil fortunes is making its first major investment into the global clean-energy transition.
Corporacion America International will build a €100 million ($112 million) ammonia plant in Burgos, Spain, fueled by solar or wind farms, Hugo Eurnekian, chief executive officer of the holding company’s oil and gas producer Compania General de Combustibles, said in an interview.
The “green” ammonia, produced with hydrogen extracted from water in a process powered by renewable energy, would be sold from 2027 to a livestock feed maker.
The energy transition remains an unsolved puzzle for Corporacion America, which is headquartered in Argentina, where the national government is keen to make the most of shale oil riches in Patagonia.
“Humanity is still searching for the best solution, or combination of solutions, to the problem of decarbonising the economy,” around the world, said Eurnekian, reeling off a list from synthetic fuels to thermal power with carbon capture. “We want to play a key role in the process.”
Corporacion America was founded by 90-year-old billionaire Eduardo Eurnekian, who’s navigated changing global economics and local politics for at least five decades. More recently, he’s been handing over the reins to the next generation, including nephew Hugo, 40. The family got rich through textiles, telecoms and airports before adding energy to its portfolio.
Its incursion into hydrogen comes at a time when oil companies worldwide are figuring out the best way to guide their businesses into a new era of cleaner fuels and electrification. Demand for fossil oil is already peaking, though major energy giants are betting on natural gas to bridge the gap.
Corporacion America’s shift in course comes just a decade after it entered the oil and gas business by buying CGC, one of Argentina’s biggest drillers — though it’s been a biodiesel producer for years. It may now reduce its 70% stake in CGC after selling a convertible bond to petrochemicals manufacturer Dow Chemical Co., according to Eurnekian.
Still, the Eurnekians are far from winding down fossil operations. CGC, which acquired new oil fields in 2021, is set to drill a record number of wells this year, including three horizontal wells in Palermo Aike, which may become a new Argentine shale frontier.
CGC wants to take its first steps into hydrogen in Europe because the market for building renewable energy farms and selling production is more developed than in Latin America, Eurnekian said. Argentina’s extensive coastline and plains in Patagonia make it one of the best places in the world for converting wind energy into power. Several companies are interested in developing wind farms to make hydrogen.
“The strategy is to have a first pilot experience in Europe that allows us to understand the transition process,” Eurnekian said. “If the time comes when big-scale projects are viable, we could take advantage of the resources in Argentina.”
Other highlights from the interview:
- CGC will use proceeds of the bond sale to Dow to pay off debt due in 2024, as it seeks to take advantage of low domestic interest rates to shore up its finances ahead of Argentina’s general elections that start next month
- The deal also gives Dow an option to buy CGC’s gas for its petrochemical plants. In return, CGC gets an option to buy gas that Dow produces in shale formation Vaca Muerta
- No matter who wins Argentina’s presidential election this year, Eurnekian believes there’s consensus across the political spectrum to support Argentina’s energy sector given its potential to create export dollars
- Pace of growth will depend on how and when the next government improves the macro-economy and oil investment rules
- CGC isn’t looking at developing LNG export projects since it’s more focused on piping gas to regional neighbours, first to Chile and then to Brazil through Bolivia