YPF, Petronas progress design of LNG export project

Argentina’s YPF SA and Petroliam Nasional Berhad (Petronas) are considering creating a joint-stock company to manage business related to development of a 5-million tonne/year (tpy) LNG plant should regulators approve legislation aimed at boosting the liquefaction industry and potential future exports (OGJ Online, Sept. 2, 2022).

New details about the project—being pursued as part of a September 2022 MOU for joint development of an LNG plant in Bahía Blanca in the southern province of Buenos Aires—were made by Pablo González, president of YPF, in statements to national media.

Collaboration on the project’s design is under way, González said, but the project requires not only favorable market and legal conditions but also "a volume equivalent to 80% of the gas currently produced in Argentina [more than 140 million cu m/day]."

"After the law is approved, we will bid for the gas pipeline with Petronas, sign the final investment decision, and probably establish a joint-stock company…which will commence with a $10 billion investment and require a new legal structure," González said.

The multi-phased project, which will be the largest in South America, envisages eventual construction of three land-based liquefaction trains. Land has been secured to initiate construction. A dedicated, 36-in OD natural gas pipeline will supply initial feedstock to the plant, followed by two more pipelines.

The plan is to begin with one FPSU during construction of the first of the three trains, although a second ship could be added prior to completion of the first onshore phase, according to a company source.

The second phase includes construction of the scalable liquefaction plant with a final capacity of 25 million tpy. Total investment is estimated at $56 billion, which includes infrastructure and Vaca Muerta development over the 15-year project period.

Once state policy has been fully defined, the two companies will open the project to contributions from all gas companies operating in the country.

YPF’s González said exports could generate $15-20 billion annually. He also stressed the importance of establishing a defined energy policy to capitalize on the country's resources. “With a gas reserve horizon projected for the next 170 years, we cannot afford any further delays,” he said.

In June 2022, YPF chief executive officer Pablo Iuliano said the market in Argentina is too small for Vaca Muerta gas reserves and that development of the LNG project—the most significant project in the last 50 years—would transform the country.

“Without this [LNG project], there is no chance of bringing the 308 tcf of Vaca Muerta gas to the global market, and if we don't do it quickly, it will remain in the ground."

Iuliano referenced the need for the LNG promotion law, which would enable Petronas to invest. “We are on the verge of an opportunity that we can capture in the short term. We have the rock, we know how to do it, and there is demand."