KEY POINTS
- YPF and Shell partner to develop Argentina’s $50 billion LNG project.
- First phase targets production of 10 million metric tons annually.
- Shell replaces Petronas as a key partner in the project.
Argentina’s state-run energy company YPF has teamed up with oil giant Shell to develop the ambitious $50 billion Argentina LNG project.
The agreement, signed in the Netherlands, marks a significant shift in the project’s trajectory as Shell replaces Malaysian oil company Petronas as a key partner in the venture.
This landmark partnership aims to position Argentina as a major global supplier of liquefied natural gas (LNG), with the project’s first phase targeting production of 10 million metric tons of LNG annually.
YPF President Horacio Marin highlighted the importance of Shell’s involvement, stating,
“As a pioneer in the LNG market, Shell’s knowledge and experience will be instrumental in helping to position Argentina as a reliable and competitive global energy supplier.”
However, the project will tap into Argentina’s vast gas reserves in Vaca Muerta, a renowned shale formation that holds the second-largest unconventional gas reserve and the fourth-largest oil reserve in the world.
Key features of Argentina LNG project
Under the new agreement, YPF and Shell will extract gas from the Vaca Muerta field and transport it through dedicated pipelines to the Rio Negro coastal province, where it will be processed and exported.
The project will be implemented in stages, with the initial phase relying on LNG vessels for transportation.
According to Reuters, later phases will involve the construction of onshore LNG facilities to support expanded production.
This approach reflects a strategic effort to reduce dependence on foreign energy imports and position Argentina as a key player in the global LNG market.
Shell, a leader in LNG production worldwide, expressed its alignment with this goal.
“This project is aligned with Shell’s plans to continue growing its LNG business,” the company said in a statement.
Moreover, the project’s scope and ambition align with Argentina’s broader strategy to strengthen its position as an energy powerhouse.
By leveraging the expertise of Shell, YPF hopes to accelerate project timelines and increase Argentina’s competitiveness in the global LNG market.
Petronas exit and future of Argentina’s LNG ambitions
The entry of Shell into the Argentina LNG project signals the end of Malaysian oil company Petronas’ role in the venture.
However, YPF confirmed that its relationship with Petronas remains intact as the two companies continue to collaborate on other energy initiatives, particularly at the La Amarga Chica area of Vaca Muerta.
While Petronas has shifted focus, YPF’s alignment with Shell represents a strategic move to draw on Shell’s vast global LNG expertise.
Furthermore, YPF President Horacio Marin described Shell’s entry as a major win for the project, stating that it would enhance Argentina’s reliability as a supplier of LNG to global markets.
However, Argentina LNG project is seen as a transformative opportunity for the nation’s economy, unlocking export potential and creating thousands of jobs.
Additionally, the move positions Argentina as a future LNG export hub in Latin America, ready to compete with established players in the global energy market.
