KEY POINTS
- Shell has exited the planned multibillion-dollar Argentina LNG project a year after signing a development agreement with YPF.
- The withdrawal forces YPF to find a new strategic partner capable of financing and leading the ambitious export scheme.
- Analysts say prospective investors will scrutinise Argentina’s policy environment and global LNG demand before stepping in.
Shell has withdrawn from the proposed multibillion-dollar Argentina LNG project, stepping back barely a year after it entered a project development agreement with YPF, the country’s state-controlled energy company.
The decision marks a significant shift for a venture that had been pitched as one of South America’s most ambitious attempts to push its natural gas resources onto the global market.
The UK supermajor had been expected to help steer the project into a fully fledged export operation, leaning on both its balance sheet and long-running experience in LNG developments worldwide.
Its exit leaves YPF with the task of finding another heavyweight investor willing to anchor the plan at a time when the economics of large-scale LNG are growing more complex, shaped by shifting demand in Asia, rising competition from the United States and the tightening of capital expenditure across parts of the industry.
Departure Puts Pressure on YPF to Court a New Investor for Flagship LNG Vision
People familiar with the matter say the departure has not halted YPF’s ambitions, but it has forced the Argentine producer to widen its search for partners that can match Shell’s technical depth and financial muscle. While the government sees LNG exports as a path to stabilising revenue and boosting foreign currency earnings, the departure of a partner of Shell’s scale inevitably slows momentum. Industry analysts believe prospective investors will be weighing both Argentina’s policy landscape and the longer-term future of gas demand before committing to a scheme of such size.
Shell has not publicly disclosed detailed reasons for its withdrawal, though the move aligns with broader portfolio adjustments undertaken by several oil and gas majors as they balance shareholder demands, decarbonisation pressures and the need to prioritise projects with the strongest returns. YPF is expected to outline its next steps once talks with potential replacements advance.
