YPF, Shell ink Argentina LNG project development agreement

Argentine state-controlled oil firm YPF and Anglo-Dutch giant Shell signed a project development agreement on the former’s Argentina LNG project.

YPF also confirmed that Malaysia's state company Petronas had exited the project, following a press report concerning this earlier in the year.

A project development agreement is a legal document that outlines the specific details of a project between two or more parties. 

With Shell – an offtaker and major oil and gas trader – YPF will develop the first phase of Argentina LNG, which involves LNG production capacity of 10Mt/y.

Gas would come from dedicated blocks in the Vaca Muerta shale play and transported to Sierra Grande, Río Negro province, for liquefaction, via 580km of dedicated pipelines, YPF said in a statement.

"The parties commit to mature the development of the first phase of the Argentina LNG project towards a decision to enter the Front-End Engineering and Design (FEED) stage," YPF said.

YPF has previously said that, following completion of engineering work, the project would apply for benefits under the Rigi investment incentives regime and that exports would start in 2027 via floating liquefaction vessels.

This week the company announced it had acquired from ExxonMobil a stake in Vaca Muerta gas block Sierra Chata, operated by Pampa Energía and deemed one of the formation’s most "prospective gas assets" by YPF. 

Argentina recently issued fine-print governing the implementation of the hydrocarbon sections of its economic framework law, encompassing areas including LNG.

In Argentina, Southern Energy’s LNG exporting project, with capacity of up to 2.45Mt/y, is the most advanced, having entered the Río Negro environmental permitting system.

Tecpetrol also has an LNG project on the drawing boards, as do TGS-Excelerate Energy.