New Attempt to Establish Argentina as LNG Exporter

Argentina's YPF is joining forces with PAE and Golar LNG in a US$3 billion venture to develop a new floating LNG export facility in the country. The move follows previous aborted attempts at becoming a long-term LNG exporter. The project will use the FLNG Hilli vessel offshore Río Negro province to process gas from the Vaca Muerta shale play, with first exports targeted for 2027. The consortium plans to achieve year-round operation. Argentina’s LNG trade has hitherto been highly seasonal.

YPF, Argentina's state-owned energy company, will join a consortium with Pan American Energy Group (PAE) and Golar LNG to boost production and exports at the Vaca Muerta shale gas formation in the Neuquén basin, according to a social media post by YPF's President and CEO Horacio Daniel Marín.

Strategic Partnership

The US$3 billion venture centres on installing the Golar-controlled FLNG Hilli in Argentina’s San Matías Gulf, off the coast of Río Negro province. The consortium expects regulatory approvals and a final investment decision for the project's first phase in 1Q 2025, with first cargoes leaving the country scheduled for 2027.

Marín expressed that YPF's participation marks a significant milestone for Argentina's energy industry, projecting LNG exports worth US$15 billion by 2030. The collaboration aims to transform Vaca Muerta gas into LNG whilst maximising efficiency and profitability throughout the Neuquén basin.

20-year project

Golar and PAE shook hands on a 20-year FLNG deployment project in July 2024. PAE subsequently reserved the FLNG Hilli, which boasts a nameplate capacity of 2.45 million tonnes per annum (mtpa), in October 2024.

Technical analyses confirmed the San Matías Gulf's suitability, with its 35-metre water depth allowing unrestricted operations. The vessel will initially utilise spare capacity in Argentina's existing pipeline network during low-demand periods. However, this arrangement necessitates additional infrastructure to be installed first, including pipeline interconnections, a compressor station, onshore and underwater gas pipelines, as well as a mooring system.

Year-round shipments

PAE plans to achieve year-round operation through new transportation facilities, noting San Matías Gulf's advantageous proximity to the Vaca Muerta play. Argentina’s LNG trade has hitherto been highly seasonal. Golar maintains a 10pct stake in Southern Energy, the joint venture established with PAE, which currently focuses on securing regulatory and environmental approvals whilst seeking additional investors.

Golar has also partnered with China's CIMC Raffles and Black & Veatch to develop an MK II FLNG vessel, converting the LNG carrier Fuji LNG into an FLNG unit with a liquefaction capacity of 3.5mtpa. This conversion will become Golar's third FLNG vessel, following Hilli and Gimi.

Argentina's LNG Export Journey

Argentina can look back on several attempts to establish itself as an LNG exporter. However, its gas resource base notwithstanding, previous export projects at Bahia Blanca failed due to a combination of factors led by production trailing demand growth, economic policies and insufficient foreign direct investment. The need to import gas has since added an extra burden for the country’s embattled economy. Nevertheless, YPF has maintained throughout it would not give up on its LNG exporting ambitions.

The conglomerate has pushed for more favourable government policy to develop gas production from Vaca Muerta, which, even though it may not have led to significant exports yet, has nonetheless contributed immensely in keeping the need for LNG imports in check.