With a projected total expenditure of US$51 billion, state oil giant YPF has applied to take part in President Javier Milei’s investment incentive program for its “Argentina LNG” project. The plan aims to exploit the gas resources of the Vaca Muerta shale formation for export in the form of liquefied natural gas. The Argentina LNG project, supported by YPF, Italy’s Eni, and the United Arab Emirates energy firm XRG, has been described as the “most important investment presented to date” under the Régimen de Incentivo para Grandes Inversiones, according to YPF Chair and CEO Horacio Marín. “This project will transform natural gas from Vaca Muerta into LNG exports destined for international markets,” Marín stated.
The project aims to convert gas from Vaca Muerta, recognised as one of the largest shale oil and gas formations globally, into LNG for international markets. This will be achieved thru the deployment of two floating liquefaction units, which will have a total capacity of 12 million tonnes per annum off the coast of Río Negro. The investment plan stipulates that US$29 billion is to be allocated by the anticipated commencement of the project in 2031. YPF anticipates that the project will yield approximately US$10 billion in annual export revenues over a span of twenty years, which could position it as a significant contributor to Argentina’s foreign currency reserves. The broader project encompasses gas production in Neuquén province, along with the necessary transport infrastructure, processing facilities, and liquid-fractionation plants required to support the floating LNG units.
Of the US$29 billion anticipated for investment by 2031, approximately US$24 billion is earmarked for infrastructure, while the remaining US$5 billion is designated for upstream development and drilling the necessary wells to enhance production adequately to meet the full capacity of both liquefaction units. “Adhering to RIGI is a crucial step to move forward with a project that will open a new chapter for Argentina as a global energy exporter,” Marín said. Launched under Milei, RIGI provides incentives aimed at drawing substantial investment into key sectors. The scheme is a central element of the government’s efforts to attract foreign capital into Argentina and enhance exports. Vaca Muerta serves as a fundamental element of Milei’s economic strategy, with the administration aiming to enhance oil and gas production while boosting energy exports as part of its initiatives to fortify Argentina’s financial position.
The Argentina LNG application follows YPF’s submission in May of a separate US$25-billion project under RIGI aimed at accelerating development of the Vaca Muerta shale formation. During the planned construction phase, the LNG project is anticipated to create over 20,000 jobs annually, as reported by YPF. Around 8,000 jobs per year are anticipated to be maintained throughout the project’s operational and commissioning phase. The project is anticipated to create substantial opportunities for domestic suppliers, with YPF projecting approximately US$15 billion in contracts for goods and services, thereby bolstering the growth of local industry and enhancing energy-related productive capacity.
