Ypf Moves Forward With Gas Export Agreements Worth Usd 15 Billion Annually

The state oil company YPF has practically closed commercial agreements for the sale of 30 million tons per year (MTPA) of Liquefied Natural Gas (LNG), which would represent USD 15 billion in annual exports.

This progress is part of the "Argentina LNG" project, a key initiative to boost Vaca Muerta and turn the country into a global energy exporter in the next five years.

Main markets and ongoing agreements

The main destinations for Argentine LNG would be India, China, Japan, and Germany, according to sources close to the negotiations. These agreements are crucial for the final investment decision, scheduled for August, and for obtaining financing from international banks.

YPF's president, Horacio Marín, conducted a 20-day tour of Asia, where he secured purchase commitments of up to 15 MTPA, equivalent to more than USD 7 billion annually in LNG exports. Additionally, new contracts with European companies for up to 4 additional MTPA are expected to be announced in the coming weeks.

Structure of the "Argentina LNG" project

The development of Argentina LNG involves a total production of 30 MTPA, divided into three stages.

• Last week, YPF signed a Memorandum of Understanding (MOU) with OIL, GAIL, and OVL from India for the export of up to 10 MTPA.
• The allocation of 4 MTPA to companies from China and Japan is anticipated.
• Another 4 MTPA would be directed to German companies, currently in the Non-Disclosure Agreement (NDA) phase.

YPF and Shell sealed an agreement in December, securing the production and purchase of 10 MTPA, leaving only 1 MTPA to be placed.

Infrastructure and financing

The success of the project depends on the construction of the necessary infrastructure for LNG production and export. In the first phase, the arrival of three or four liquefaction ships to the coasts of Río Negro is planned, with sales contracts used as collateral to obtain between USD 10 billion and USD 20 billion in financing.

Additionally, the intention to build an onshore plant in Río Negro remains.

A global market in transformation

The war between Russia and Ukraine altered the global energy supply, and the transition to cleaner sources opens a window of opportunity for Argentina in the LNG market. Besides Asia and Europe, Brazil could become another key buyer of Argentine gas, either through pipelines or LNG.

Vaca Muerta hosts the second-largest unconventional gas reserve and the fourth-largest oil reserve in the world, allowing for the projection of annual exports of USD 15 billion in LNG and USD 15 billion in oil by 2031.

These USD 30 billion are equivalent to the contribution of the agricultural sector in years of good harvests and could be a solution to the chronic dollar shortage the country faces.