Argentina’s YPF to merge LNG project with rival’s joint venture

Argentina’s state-run energy company YPF SA will join a venture being developed by rival shale driller Pan American Energy Group SL and liquefied natural gas shipper Golar LNG Ltd., YPF President Horacio Daniel Marín said on LinkedIn.

The merger of what have been two separate projects — one led by YPF, the other by PAE and Golar — would be key to helping boost production and exports in Argentina’s Vaca Muerta, the second-biggest deposit of shale gas in the world. YPF and Pan American, which is 50 percent owned by British oil major BP Plc, are Argentina’s top oil and gas producers. 

Argentina’s LNG export ambitions come as the South American country competes with expansions from the United States and Qatar, the world’s top two natural gas producers, respectively. LNG demand has been on the rise in Europe, where importers are cutting back on gas piped from Russia, and in Southeast Asia, where new buyers are trying to de-carbonise their energy portfolios. 

The YPF-led export plant has until now counted on support from Malaysia’s Petronas, but the future of the partnership isn’t set in stone.

Argentina has been looking first to regional neighbors Chile and now Brazil to pipe increasing production from the Vaca Muerta formation. Exporting LNG is a next step, but any project would require pouring billions of dollars into infrastructure in a nation that has severe investment and financing obstacles, even with the emergence of libertarian President Javier Milei, who took office a year ago with a mission to make Argentina more business-friendly. 

Marín has frequently said that the best route for Argentina’s shale industry is to unite around one LNG facility. Marin recently cast doubt on Petronas continuing in YPF’s project. At the same time, executives at Golar said that its venture with Pan American would welcome other participants.