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The partners decided that the project would be located in Sierra Grande, Río Negro instead of the initial Bahia Blanca, Buenos Aires plan.
According to a statement by YPF, after extensive evaluation process the duo chose Sierra Grande as the most advantageous location taking into account all the technical, economic, environmental, geographic, fiscal, and regulatory variables.
The Sierra Grande area appears to be the best option due to the shorter length of the pipelines needed to transport shale natural gas from Vaca Muerta, and the synergy with the development of local infrastructure.
Also, the sea depth in the Sierra Grande area is greater, minimizing the need for dredging to achieve the draft for the operation of the planned vessels, while the province of Rio Negro offered the regulatory and fiscal conditions necessary for the development of the project, YPF said.
This project would be one of the most important private initiatives in the history of Argentina, and would make the country the fifth largest LNG producer in the world, the statement said.
It would have a capacity of 30 million tons per year, according to the statement.
YPF said the decision on the location of the project is the first step towards several conditions that must be fulfilled in order to make the project’s final investment decision.
The next steps will be to search for LNG buyers worldwide and then secure the financing with investors and international banks.
Floating LNG
In March this year, YPF launched a tender for engineering work for floating LNG units as part of its planned Argentina LNG export project.
YPF said at the time the project will be built in stages and have a capacity of 25 mtpa of LNG.
YPF and a Petronas’ unit in Argentina signed a joint study and development agreement on September 1, 2022 to work on the potential development of the Argentina integrated LNG project, Argentina GNL, to liquefy natural gas from Vaca Muerta’s vast shale gas resources.
Earlier this year, YPF’s CEO Horacio Marin said during YPF’s 2023 earnings presentation that the company expects to take a final investment decision on the first phase of the planned Argentina LNG export project in 2025.
He said that the first stage of the project “aims to bring to Argentina an existing floating LNG facility with an initial capacity between one and two mtpa by 2027.”
Marin did not provide further info on the FLNG.
Petronas may move one of the company’s existing two units from Malaysia to Argentina.
Currently, Petronas operates two floating LNG facilities, namely the 1.2 mtpa PFLNG Satu as well as the 1.5 mtpa PFLNG Dua, both located offshore Sabah. It has also a third FLNG with a capacity of 2 mtpa on order in South Korea.
Marin said the second stage of the LNG project consists of the construction of two new floating LNG faculties, representing a capacity of around 8-9 mtpa by 2030.
He said that FID on the first phase is expected by mid-2025 and “requires investments of around $200 million on a gross basis.”
Third stage
YPF’s presentation showed that the third stage of the project from 2030-2032+ consists of onshore modules with a capacity of 15-20 mtpa.
YPF’s VP for strategy, business development, and control, Maximiliano Westen, also said during the presentation that YPF is “moving into the FEED stage” with the LNG project.
“We need to develop engineering, there are several packages of engineering. This year and the big part of the next year we are going to work on engineering,” he said.