Argentina's YPF evaluating locations for Atlantic Coast LNG export terminal

Argentina's state-backed energy company YPF is evaluating locations on the Atlantic coast to build a terminal to export liquefied natural gas (LNG) as part of a $11.5 billion investment project to take advantage of the huge gas resources in the Vaca Muerta shale play, chairman Pablo Gonzalez said late May 30.

"There are three or four locations under study in the provinces of Buenos Aires and Rio Negro, but the issue has not yet entered the board of directors for a decision," Gonzalez told the state newswire Telam.

He said the project would entail the construction of the plant, a feeder pipeline, and the drilling and completing of wells to supply the gas, adding that YPF is one of a few companies looking at developing such LNG export infrastructure. He did not name the other companies.

YPF has been working on its project for two years, and the next step after finding a location is to complete the engineering studies and then secure financing for the $11.5 billion project.

He expressed optimism that the project will come about, saying that Vaca Muerta holds enough gas resources to meet the country's needs and export the rest.

Argentina produces about 127 million cu m/d, of which 36% comes from Vaca Muerta. With consumption averaging 140 million cu m/d, the potential to start exporting is not far off. Indeed, the government is spearheading a three-year project to build a new pipeline, named after former President Nestor Kirchner, with 44 million cu m/d.

The pipeline will increase the takeaway capacity from Vaca Muerta, meaning that producers will have to find new markets to sell additional production. The first new supplies will go toward replacing gas imports that averaged 22.6 million cu m/d in 2021, after which the government said existing pipelines can be used to increase exports to Brazil, Chile and Uruguay while the proposed LNG export capacity is under construction.

"Argentina produces more gas than it can transport today," Gonzalez said. "The gas pipelines have absolutely collapsed, and that is why the new Nestor Kirchner pipeline is so important."

Over the past two months, Argentine officials have been pushing for the construction of LNG export facilities to take advantage of Vaca Muerta's production growth potential. On May 21, Interior Minister Eduardo de Pedro said a second pipeline could be built to supply a LNG export terminal in on the Atlantic coast of Rio Negro, while a month earlier Economy Minister Martin Guzman said that he was considering a more than $10 billion LNG project to start operations as soon as 2026.