Argentina’s 51% state-owned oil and gas company YPF SA, in partnership with Malaysian national oil company Petronas, have settled on the northern edge of Patagonia for their planned LNG export project.
“After an extensive technical and economic evaluation process undertaken by the YPF and Petronas teams we came to the conclusion that the most advantageous place for the project is Sierra Grande in the province of Río Negro,” executives said in a joint statement.
Río Negro, considered to be in northern Patagonia, borders Neuquén, home to the vast majority of the natural gas-rich Vaca Muerta shale formation. The companies said the proximity to the unconventional gas fields, and the shorter pipelines, would be needed to transport the feed gas to the facilities.
The deepwater port and accommodating regulatory fiscal and economic conditions were also part of the decision, they said.
The $30 billion liquefied natural gas export terminal would be “the largest investment in Argentine history,” Río Negro Gov. Alberto Weretilneck said.
“From the beginning, we trusted in the technical and economic rigor that would guide this choice,” he said. “Know that we Rio Negros will support this decision with full responsibility, ensuring that the project advances without obstacles. We are ready to give our best and contribute to the development of Patagonia and the insertion of our country in the global LNG export market.”
Weretilneck has been a supporter of Argentine President Javier Milei’s push to open the country to investment and to streamline bureaucracy. The Régimen de Incentivo a las Grandes Inversiones (RIGI) bill, legislation that incentivized large investment projects, made it through congress in June and would help projects such as the LNG plant.
Political swings in Argentina and extreme capital controls and other bureaucratic provisions have hindered projects of this nature from going ahead in the past. The RIGI offers tax, customs, legal and foreign exchange benefits for any investment in Argentina exceeding $200 million.
YPF officials earlier this year said that plans were to bring an existing floating LNG (FLNG) facility with 1-2 million metric tons/year (mmty) of capacity to the country by 2027.
The second stage would comprise two new floating facilities with capacity of 8-9 mmty, to begin operation by next decade. Beyond 2030, the partners are planning to add onshore liquefaction capacity, eventually bringing the total project to 15-20 mmty.
Sanctioning is slated for next year, executives said.
Recently, developers of another LNG project also announced they were moving forward.
Golar LNG Ltd. inked an agreement with oil and natural gas producer Pan American Energy S.L. (PAE) to begin exporting LNG from Argentina for 20 years starting in 2027. Under the agreement, Golar would deploy a 2.45 mmty FLNG vessel to the Argentine coast.
The FLNG project “will provide an international outlet for Argentina’s vast and attractive natural gas reserves, creating value to Argentina and its gas stakeholders,” said Golar CEO Karl Fredrik Staubo.
Argentina is pursuing LNG exports as a way to capitalize on its vast unconventional gas resources.
Currently, Argentina imports LNG in the winter months to meet demand, although this trade is diminishing.
This year through June Argentina imported 0.35 mmt of natural gas. That compared with 0.72 mmt through June 2023. More than 75% of 2023 volumes originated in the United States, according to Kpler data.
Analysts have suggested that the Biden administration’s pause on new worldwide export permits could propel projects in other parts of the globe, such as Argentina. Complicating matters, a global LNG supply glut could be around the corner, with a flood of export capacity slated to enter service in the coming years.
