Argentina signs deal to potentially sell 10 million mt/year of LNG to India

Argentina's state-run energy company YPF said Jan. 21 it signed a memorandum of understanding with three Indian companies to work on an agreement that could lead to exporting up to a combined 10 million mt/year of LNG to these buyers, a key for developing the huge resources in the Vaca Muerta shale play.

The MOU was signed with the state-owned companies Oil and Natural Gas Corporation, or ONGC, GAIL and ONGC Videsh, YPF said in a statement.

"We are convinced that the country [Argentina] has an opportunity to become an energy exporter and achieve the goal sought by the entire industry of generating revenues of $30 billion in the next 10 years," YPF CEO and chairman Horacio Marín said after the meeting in New Delhi that was attended, too, by Indian Minister of Petroleum and Natural Gas Hardeep Singh Puri.

As part of the deal, the three potential buyers will also consider working with YPF on exploring for oil and natural gas in Argentina, as well as developing lithium and other critical minerals there, YPF added.

The meeting came at the end of an international trip by YPF to seek future sales deals in Israel, Japan and South Korea.

Ahead of the tour, a YPF source said in December that a MOU was likely with India, adding that the country needs to line up future gas imports for energy security.

At 10 million mt/year, this would represent one-third of the proposed capacity of the Argentina LNG export project. The gas will be supplied by dedicated pipelines from Vaca Muerta, which holds some 300 Tcf of resources, significantly more than the country's annual consumption of 2 Tcf.

The agreements in India are the first MOUs since YPF signed 19 confidentiality agreements with potential buyers in Asia and Europe in 2024, a key for raising financing for Argentina LNG.

Pushing forward

The LNG export project is advancing faster than had been expected. In December, Shell agreed to join Argentina LNG with the aim of building an initial 10 million mt/year of production capacity.

The project initially called for installing two floating liquefaction terminals and an onshore facility in the San Matías Gulf, a deep-water bay in Río Negro province due east of Vaca Muerta. But YPF is now considering installing a cluster of four FLNGs, of which the first has been ordered by BP-backed Pan American Energy, or PAE, from Norways' Golar LNG, a $3 billion project. The Hilli Episeyo FLNG will have capacity to produce 2.45 million mt/year of LNG, or 11.5 million cu m/d of gas, starting in the second half of 2027.

YPF has said it could order a second FLNG from Golar or another supplier to install alongside PAE's. The second FLNG will have more capacity -- at around 3.6 million mt/year -- and be installed to start operations at the end of 2027 or early 2028, while the others will follow by as soon as 2028, the source added.

To prepare for supplying the export terminals, YPF reached a deal in December to buy ExxonMobil's and Qatar Energy's stakes in Sierra Chata, a gas-rich block in Vaca Muerta operated by Pampa Energía.

PwC, an international consulting firm, forecasts that Vaca Muerta's gas production will more than double to 250 million cu m/d by 2030, up from around 80 million cu m/d in November. With the country's average demand at 140 million cu m/d, the rest will be available for export. Argentina is producing around 133 million cu m/d of gas, with the rest coming from conventional reserves.