YPF Eyes Southern Energy SA FLNG Project

(Camilo Ciruzzi , Energy Analytics Institute, 8.Dec.2024) — Buenos Aires-based YPF SA has an eye solidifying its position in the global LNG market. That, as the state-owned company’s eyes are now focused on two liquefaction projects in Argentina.

While advancing its own project (Argentina LNG), YPF has also announced its participation in Southern Energy SA, an ambitious joint venture led by Pan American Energy (PAE) and Norway’s Golar LNG.

This consortium, which also includes Argentina’s Pampa Energía and the UK’s Harbour Energy, seeks to export LNG from Argentina to global markets, marking a significant milestone in leveraging the vast Vaca Muerta shale gas resources.

YPF will join Southern Energy with a 15% interest, while PAE retains a 40% interest. The remaining interests are spread out as such: Pampa Energía (20% WI), Harbour Energy (WI 15%), and Golar LNG (10% WI).

Southern Energy entails an initial investment of $2.9bn in its first phase (2025-2031), with a projected total investment of $7bn over its 20-year lifespan.

At the heart of the initiative is the ‘Hilli Episeyo’ FLNG vessel, a floating liquefaction unit with a production capacity of 2.45 million tonnes per annum (mtpa). This nearly 300m long vessel will operate off the Atlantic coast of Río Negro Province, in the San Matías Gulf. The location was chosen based on extensive bathymetric and oceanographic studies.

YPF’s participation in Southern Energy does not mean it will abandon its own Argentina LNG project in Punta Colorado. This broader initiative, Argentina LNG, aims to reach an export capacity of 30 mtpa through various stages of development.

Impact and outlook

Southern Energy and Argentina LNG represent strategic bets not only for YPF but also for Argentina’s energy sector as a whole. Both initiatives aim to maximize the potential of Vaca Muerta’s resources, reduce dependence on energy imports, and position Argentina as a key player in the global LNG space.

With public policies such as the incentive regime for large investments, also known as RIGI by its Spanish acronym, which promotes investments in strategic resources, Argentina is better-positioned to attract foreign capital and strengthen its energy infrastructure.

YPF’s involvement in Southern Energy and its comprehensive vision with Argentina LNG signal the beginning of a new era in Argentine gas exports. But, neither LNG export project will not be without its headwinds spanning political uncertainties, issues procuring equipment and infrastructure in need of capacity expansions.

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