The agreement, announced by Argentinian President Alberto Fernandez and Chilean President Gabriel Boric at the Summit of the Americas in Los Angeles, will see Argentina deliver 300,000 cu m/d to Chile of firm natural gas until September.

Gas will be transported on the Del Pacifico pipeline, connecting Neuquén, which contains Argentina's vast Vaca Muerta gas field, with Chile's southern Biobio region.

The move will help over 30,000 families in Concepcion and Los Angeles with an approximate 15% reduction in their gas bills. The region currently relies on natural gas shipped by tanker from the 500-km (310-mile) Quintero regasification terminal in the country.

"This is a win-win, which is how foreign relations should work," Boric said after the announcement.

Argentina could ramp up this volume through a tender with private firms that help Chile reduce more expensive LNG imports.

"And now what we are proposing is that with the collaboration of private companies, we can ensure a stable contract, that is, no interruption, for 4 million cu m/d," Fernandez said.

Argentina started exporting gas to Chile over the Andes in the 1990s, initially at volumes that were to reach 20 million cu m/d but was forced to curtail supplies to meet domestic energy shortages after the government froze energy tariffs. To make up for this, Chile built two regasification terminals to supply the north and center of the country.

"That’s something we’re going to have to do because before we had to default on a contract with Chile very suddenly, hurting Chile’s economy and Chileans’ lives," Fernandez said.

Chile received 822,139 mt of gas from Argentina in the first five months of this year, compared to 247,748 kt over all of 2021. Imports of LNG were 1.1 million mt, mainly from the US, up from 634,369 mt in the year-ago month.

The agreement will also benefit from the revamping of a 345-kV transmission line connecting northern Chile and northwestern Argentina, allowing the former to export surplus solar power to its neighbor, Luis Atienza, a former chief executive of Spain's Red Eléctrica, said at the signing ceremony.

Thanks to the arid Atacama Desert, Chile boasts some of the planet’s highest levels of solar radiation and has, so far, installed 5GW of solar capacity mostly in the north of the country.

"Chile is today progressing in energy integration with the region, which will aid supplies," said Energy Minister Claudio Huepe.

The two presidents also spoke about the authorization granted to Argentinean gas producers to export LNG through Chile, and agreed to continue working to reverse the Transandino gas pipeline by early 2023 to transport crude oil from Vaca Muerte to Chile's 116,000 barrel/day Biobio refinery, the country's largest.

The two governments also formed a binational group recently to share expertise and know-how to build lithium output in both countries.