Argentina has immense potential to be a key LNG exporter given the vast resources at its Vaca Muerta shale formation and a consensus among political parties that oil and gas resources are part of the solution for Argentina's economy, Tecpetrol chief executive Ricardo Markus said.
President Javier Milei's government is reworking a package of economic measures, including over 100 changes to energy law to open the market to private companies and boost exploration and production at the unconventional Vaca Muerta formation, which has 308 Tcf in natural gas reserves and 16bn bl of crude reserves, according to the US Energy Information Administration.
Investments in the basin have already been announced despite the political and economic turmoil in the country. "This is because political parties realize that [exploiting] conventional resources [at Vaca Muerta] could be good for the economy," Markus said today at the CERAWeek by S&P Global conference in Houston, Texas.
The first goal for companies interested in investing in Vaca Muerta is increasing production and meeting local demand — exports through pipelines will follow. Argentina and Chile have reopened a gas pipeline for exports to the latter.
Exports in the form of LNG will be the third step, but in order to reach this, companies are waiting for congress to approve a law that would provide tax incentives to the development of LNG projects.
In a revised version of the sweeping omnibus bill, which has been stalled in congress since early February, the government is considering new changes that would allow for 30-year contracts to export LNG. While still in an early stage, the legislation would include tax incentives for large-scale investments, such as LNG export terminals.
Among the considerations for the additional changes is a planned project by the state-run YPF and Malaysia's Petronas. The project would initially involve a $10bn investment for an LNG liquefication plant using Vaca Muerta natural gas. The long-term vision includes investments of up to $50bn.
The first stage would use an existing floating liquefaction unit (FLNG) that would have a capacity of 1mn-2mn t/yr by 2027. The second stage would involve building two new FLNGs to bring capacity to 8mn-9mn t/yr by 2030.
A decision on the project has been pushed back to mid-2025.
