Argentine energy giant YPF is poised to announce a major partnership that will significantly boost the nation’s liquefied natural gas (LNG) export capabilities.The company will join forces with Pan American Energy (PAE) and Norwegian LNG specialist Golar LNG in a project slated to come online in 2027.
Under the agreement,YPF will acquire a 15% stake in Southern Energy,the company behind the LNG venture.Other stakeholders include Golar LNG (10%),British firm Harbour Energy (15%),Pampa Energy (20%),and PAE,which will hold the largest share,increasing from its current 55% to 40%.
“YPF’s strategic plan to leverage Vaca Muerta gas reserves for global markets is evolving,” said Horacio Marin, President and CEO of YPF. “Recent market dynamics have led us to consider expanding our LNG ambitions.”
Marin revealed that Argentina could potentially deploy four LNG production vessels,rather than the initially planned two,by 2030. This shift in strategy is driven by the potential cost-effectiveness of leasing smaller, mobile LNG vessels compared to building a large-scale onshore liquefaction plant.
YPF’s entry into the PAE project will see gas from the Austral Basin cooled to extreme temperatures, compressing its volume for efficient maritime transport via the Hilli Episeyo vessel.This floating LNG facility will have a daily export capacity of 11.5 million cubic meters of gas during the summer months (October to April),a period of lower domestic demand.
Negotiations are underway to secure year-round LNG exports from the project. YPF is also in discussions with Golar LNG to bring an additional vessel online by 2027, further expanding Argentina’s LNG production capacity and necessitating the construction of a dedicated gas pipeline.
Marin envisions adding two more LNG vessels between 2029 and 2030, each with a capacity of 20 million cubic meters per day. This enterprising plan could see Argentina’s total LNG production capacity reach 120 million cubic meters per day, nearly doubling current gas production levels.
While the initial plan involved building a large onshore LNG plant by 2031, the estimated $5 billion investment and associated risks have prompted YPF to reconsider. The plant’s feasibility is now being debated, with some experts suggesting it may not be viable until 2035. Simultaneously occurring, potential buyers in Brazil, India, Japan, and Germany are eager for a more immediate supply of Argentine LNG.
Shell, the Anglo-Dutch energy giant, is emerging as a potential partner and buyer in a massive $140 billion natural gas project in Argentina. This comes amidst reports that Petronas, the malaysian state-owned oil and gas company, is poised to withdraw from the venture. While the Petronas departure remains unconfirmed, industry insiders suggest it’s practically a done deal.
The proposed project, spanning two decades, hinges on securing long-term contracts with buyers.These agreements are crucial for attracting international financing and mitigating the project’s inherent risks. A final investment decision (FID) is expected in 2025,paving the way for the construction of the first gas ships.
“With gas at 8 dollars per million BTU in port, we can be competitive with the United states,” a sector representative stated. However, some executives believe profitability requires a price point of $6.50 per million BTU at the argentine export point, significantly higher than the current $3 per million BTU extracted from the Vaca Muerta shale formation.
The Argentine energy sector is gearing up for a crucial year in 2024, focusing on securing long-term contracts with international buyers. These agreements will be instrumental in unlocking the necessary financing for this ambitious project and establishing Argentina as a major player in the global natural gas market.
The potential involvement of Shell, a global energy leader, could provide a meaningful boost to the project’s credibility and attract further investment. The coming months will be critical as Argentina seeks to solidify its position in the global energy landscape.
## World-Today-News Exclusive Interview
**YPF’s CEO on Argentina’s Growing Role in the Global LNG market**
**Interviewer:** Horacio Marin, CEO of YPF. Thank you for joining us today. This new partnership with PAE, Golar LNG, and others marks a meaningful step for Argentina in the LNG space. Can you elaborate on the strategic rationale behind this move?
**Horacio Marin:** It’s a pleasure to be here. This partnership is a vital part of YPF’s strategy to maximize the potential of Argentina’s vast vaca Muerta gas reserves. As global energy dynamics shift,we see a strong and growing demand for LNG. This collaboration allows us to participate actively in that market while also diversifying our revenue streams.
**Interviewer:** This project will utilize floating LNG facilities rather than building a large onshore plant. What are the advantages of this approach?
**Horacio Marin:** Versatility and cost-effectiveness are key. Floating LNG facilities like the Hilli Episeyo allow us to respond quickly to market demands and offer a more agile approach compared to traditional, land-based infrastructures.
**Interviewer:** You mentioned potentially expanding this project to four LNG production vessels by 2030. What drove this decision?
**Marin:** The economics of smaller, mobile LNG vessels are increasingly attractive. This allows us to scale our LNG production in line with demand without incurring the significant capital expenditure of building a massive onshore plant.
**Interviewer:** This project will see gas from the Austral Basin being liquefied for export. can you offer details on the timeline for bringing this production online?
**Marin:** We are targeting 2027 for the initial phase. We’re leveraging existing infrastructure and expertise, which will streamline the development process. The Hilli Episeyo will liquefy gas sourced from the Austral Basin, allowing us to effectively utilize our resources.
**Interviewer:** The initial plan involved exports during the summer months. Are there efforts to achieve year-round LNG exports from this project?
**Marin:** absolutely. We are actively negotiating with our partners to facilitate year-round exports. This would enable us to maximize the project’s profitability and solidify Argentina’s position as a reliable LNG supplier.
**Interviewer:** What impact do you anticipate this project will have on Argentina’s energy sector and economy?
**Marin:** This project is a catalyst for Argentina’s energy change. It will generate significant revenue, create jobs, and reduce dependence on imported energy. Moreover, it positions Argentina as a key player in the global LNG market, attracting further investment and innovation.
**Interviewer:** Mr. Marin, thank you for your time and insight.
