Argentina Advances Toward 20+ MTPA of LNG Export Capacity

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Written by Amir Richani for IIR News Intelligence (Sugar Land, Texas)

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Summary

Projects such as SESA and Argentina LNG could make Argentina one of the world's largest LNG exporters if their planned capacity is fully developed.

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LNG Expansion

Argentina could soon become a key liquefied natural gas (LNG) exporter through the development of the Southern Energy Project (SESA) and Argentina LNG projects, which combined could add more than 20 million tons per annum (MTPA) of export capacity per year.

Industrial Info Resources data show more than US$11.5 billion worth of active LNG projects on the books for Argentina.

Vaca Muerta's growing production is attracting interest from companies seeking export infrastructure aimed at generating billions in exports for the South American nation. This is being done through the construction of natural gas pipelines, processing facilities, floating liquefied natural gas (FLNG) vessels and more.

The latest of these projects to move forward is the San Matias Pipeline (SMP), a new dedicated pipeline export project connecting Vaca Muerta to the Gulf of San Matias. SMP closed a US$900 million loan structured by Citi, JP Morgan, Santander, and Itau with BBVA, Bladex, Barclays, ICBC and Bank of China also participating in the banking syndicate.

The seven-year loan includes a three-year grace period, and the pipeline requires estimated investments of US$1.3 billion.

The 36-inch-diameter pipeline will extend for 473 kilometers (293 miles) from Tratayen, Neuquen, to San Antonio Oeste on the coast of Rio Negro.

The SMP will supply SESA's two liquification plants, Hilli Episeyo and Esperanza (formerly known as MKII) FLNG vessels that will convert Vaca Muerta's natural gas into exportable LNG in Argentina's Gulf of San Matias. Operations are expected to begin in 2027 and 2028, respectively.

The two FLNG facilities will have combined capacity of 6 MTPA, equivalent to 27 million cubic meters of natural gas per day.

Overall, SESA forecasts investments of US$15 billion across the project's 20-year life, while projected exports could exceed US$20 billion from 2027 through 2035.

SESA is comprised of a consortium led by Pan American Energy (30%), YPF (25%), Pampa Energía (20%), Harbour Energy (15%) and Golar LNG (10%).

Export Capacity

SESA is part of Argentina's growing LNG export and natural gas transport capacity being built to cope with Vaca Muerta's growing output. Another project moving forward is the YPF, Eni, and XRG Argentina LNG project, which is expected to add another 12 MTPA of LNG exports, expandable to 18 MTPA.

Similarly to SESA, Argentina LNG will also have a dedicated pipeline to transport natural gas.

Together, SESA and Argentina LNG, if developed fully, could grant Argentina LNG export capacity of up to 24 MTPA. At that level, Argentina's LNG export capacity would be competing to be among the largest suppliers of LNG worldwide and further unlocking Vaca Muerta's prospects and outreach.

Additionally, Argentina is also expanding domestic natural gas capacity for Vaca Muerta through projects including Transportadora del Gas Sur (TGS) expansion of the Perito Moreno pipeline and the reversal of the Gasoducto Norte, which allows gas to flow towards Argentina's north.

Key Takeaways

• Argentina's LNG projects could add provide up to 24 MTPA of export capacity.
• The San Matias Pipeline secured a US$900 million loan to finance its construction.
• In addition to LNG projects, Argentina is expanding its natural gas and natural gas liquids infrastructure.

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