YPF Lines Up Buyers for $24 Billion Vaca Muerta LNG Project

Argentina's state-owned energy firm YPF is nearing agreements with several parties to sell the gas from its $24 billion planned Argentina LNG project, as it prepares to make a final decision on the project later this year. YPF CEO Horacio Marín announced at a conference in Bangkok that the company anticipates signing between two and three LNG contracts, each with a capacity ranging from 0.5 million to 1.5 million tonnes per year.

The $24 billion development, a joint venture between YPF, Italy's Eni, and Abu Dhabi's XRG, aims to capitalize on the vast Vaca Muerta shale formation, converting it into a significant source of LNG for global markets. The project will initially consist of two floating LNG facilities with a combined capacity of 12 million tonnes annually, with the potential to expand to 18 million tonnes.

A dedicated pipeline, spanning 527 kilometers, will transport the gas from the Vaca Muerta region to the Río Negro province on Argentina's Atlantic coast. The venture will also incorporate gas treatment and liquids infrastructure. YPF, Eni, and XRG each hold about 32% stakes in the upstream blocks feeding the development, with YPF owning 36%.

Securing long-term buyers is crucial for financing such a large-scale LNG project. Marín noted that while the financing package is unlikely to be fully finalized before the November decision, lenders are expected to provide letters of intent. The timing may prove advantageous for Argentina, as disruptions to LNG supplies from the Persian Gulf have prompted Asian buyers to seek geographically diverse sources of supply, potentially bolstering the commercial viability of the Vaca Muerta LNG project.

The partners have already applied for Argentina's RIGI investment incentive regime, further solidifying their commitment to the project.