Local player joins FLNG project seeking to make Argentina an LNG exporter

Argentina’s oil and gas firm YPF has joined a floating liquefied natural gas (FLNG) project being co-developed by Bermuda-headquartered owner and operator of liquefied natural gas (LNG) midstream infrastructure Golar LNG and Latin American integrated energy company Pan American Energy (PAE) in Argentinean waters.

The $3 billion project will see the FLNG Hilli, set to be installed in the San Matías Gulf, off the coast of Argentina’s Río Negro province, export gas from the Vaca Muerta shale deposit in the Neuquén basin. Regulatory approvals and a final investment decision (FID) for what is envisaged to be the first phase of a potential multi-vessel project are expected to be reached in Q1 2025, with exports scheduled to start in 2027. 

“We at YPF are going to join this initiative that marks a milestone in the energy industry of our country and represents a great step to be able to move forward with our Argentina LNG project, with which we hope to export USD 15,000 million in LNG by 2030,” noted Horacio Daniel Marín, President and CEO of YPF. 

“We are excited to collaborate with PAE and Golar LNG to drive growth and innovation in the energy sector. We will continue to work together to transform Vaca Muerta gas into LNG and to maximize the efficiency and profitability of the entire sector in the Neuquén basin.” 

In July 2024, Golar and PAE entered into definitive agreements for a 20-year FLNG deployment project offshore Argentina, with the latter issuing a reservation notice for the FLNG Hilli, with a nameplate capacity of 2.45 million tons per annum (mtpa), in October 2024. The project will tap into Vaca Muerta, which is described as the world’s second-largest shale gas formation. 

Since PAE says technical analyses have confirmed that San Matías Gulf is a suitable location for the vessel and the gulf’s anchoring depth of approximately 35 meters allows for operation without draft restrictions, it was selected by the partners as the FLNG unit’s installation site.

Initially, the vessel will be supplied with natural gas using the spare capacity of Argentina’s existing pipeline network during low-demand months. This will require the construction of additional infrastructure, such as the interconnection to the trunk gas pipelines, a compressor station, an onshore gas pipeline to the coast, an underwater gas pipeline to connect with the ship, and a mooring system. 

According to PAE, the aim is to enable the liquefaction vessel to operate year-round, for which transportation facilities are planned to be built. The firm underlined San Matías Gulf as the closest site to Vaca Muerta in this context. 

As previously reported, Golar will also hold a 10% stake in the recently established joint venture with PAE – Southern Energy – whose efforts are currently focused on securing the necessary regulatory and environmental approvals and attracting additional investors.

The Bermuda-based firm recently teamed up with China’s CIMC Raffles and Black & Veatch to bring to life an MK II FLNG vessel with an annual liquefaction capacity of 3.5 mtpa. The project will entail the conversion of Golar’s LNG carrier Fuji to an FLNG unit, making it the firm’s third such vessel after Hilli and Gimi.