Argentina's Southern Energy Signs LNG Export Deal

Written by Amir Richani for Industrial Info Resources (Sugar Land, Texas)

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Summary

The Southern Energy consortium signed an agreement for an eight-year deal to export up to 2 MTPA of LNG, marking Argentina's first large-scale LNG export agreement. The project is valued at US$15 billion and could generate up to US$20 billion in exports over nine years.

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Southern Energy Export Supply Agreement

The Southern Energy consortium signed a heads of agreement to supply SEFE Securing Energy for Europe (Berlin, Germany) with up to 2 million tons per annum (MTPA) of liquefied natural gas (LNG) for eight years beginning in 2027, once the Hilli Episeyo floating LNG (FLNG) vessel starts operations.

This deal would represent Argentina's first large-scale LNG supply contract.

The Southern Energy consortium is composed of Pan American Energy (Calgary, Alberta) (30%), YPF (Buenos Aires, Argentina) (25%), Pampa Energía (Buenos Aires) (20%), Harbour Energy (London, England) (15%), and Golar LNG (Hamilton, Bermuda) (10%).

The agreement covers 33% of the project's export capacity, with Hilli Episeyo at 2.45 MTPA and the MK II FLNG at 3.5 MTPA, for a total capacity of 6 MTPA. Exports over the eight year-agreement could reach US$7 billion, depending on prices.

Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Production Project Database can read detailed reports on the MK II and Hilli FLNG projects.

Both vessels are chartered for 20 years, with the first vessel expected to begin operating in 2027 and the second in 2028 at San Matias Gulf, Rio Negro Province.

The Southern Energy project is expected to represent investments of more than US$15 billion in 20 years and generate exports worth more than US$20 billion between 2027 and 2035.

"SEFE's first LNG agreement with a South American supplier which not only contributes to the geographical diversification of our portfolio, but also strengthens Europe's energy security. We are pleased to support Argentina on its journey to becoming a global LNG exporter," said Frederic Barnaud, chief commercial officer at SEFE.

Vaca Muerta's Power

Recently, energy companies operating in Argentina have focused on boosting midstream capacity to handle Vaca Muerta's growing shale natural gas output, positioning the country as a potential key international LNG player.

Besides Southern Energy, the Argentina LNG project, spearheaded by YPF, could also add another 12 MTPA of export capacity per year, with the opportunity to expand to 18 MTPA. Subscribers can read more information in related project reports.

Recently, Transportadora de Gas del Sur (Buenos Aires) was awarded a contract to expand the capacity of the Perito Moreno gas pipeline, valued at US$560 million. Subscribers can read more information in related project reports.

Industrial Info is tracking 179 natural gas pipeline and storage projects in Argentina, totaling US$4.2 billion in investment.

Key Takeaways

• Southern Energy signs deal to export 2 MTPA of LNG per year to Europe.
• The project will have a capacity of 6 MTPA and is projected to cost US$15 billion.
• Other projects like Argentina LNG and Perito Moreno will also boost natural gas transport and exports.

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