Argentina Prepares New Law to Promote LNG Investments

Written by Amir Richani for Industrial Info Resources (Sugar Land, Texas)--Last week, Flavia Royon, Argentina's energy minister, explained the government's new liquefied natural gas (LNG) law in Parliament. The law aims to attract investments to the LNG sector and to develop the Vaca Muerta shale region. The law seeks to develop the areas of production, storage, trade and transport of LNG infrastructure in Argentina.

It contemplates a 30-year framework to guarantee stability for companies investing in LNG production. For companies or projects to join the program, they are required to invest at least $1 billion for six years in assets with a capacity of 1 million tons of LNG per year.

In return, the Argentine government will offer benefits that include amortization of income tax. Moreover, the projects will have export authorizations for 30 years after the first shipments, and they will enjoy access up to 50% of those exports in foreign currency.

Argentina is facing a severe economic crisis with high inflation and the depletion of foreign reserves. As a result, the government has imposed strict currency controls, limiting access to foreign currency.

The aim of the law is to develop LNG exporting gas facilities that cater to increasing demand from European and Asian markets and to further develop Vaca Muerta's natural gas production.

"We have resources for over 150 years, and today we are exploiting them by 8%. It is a scenario that makes it feasible to think beyond our internal market and the regional one (Brazil, Chile, Uruguay). That is why we consider it pertinent to have a framework to promote the installation of LNG projects in Argentina," said Royon.

Last year, Petronas and Argentina's YPF signed a deal to build an LNG export facility. The investments for this development are projected at US$10 billion, according to information highlighted by Royon during her presentation in the parliament.

"This LNG challenge is going to generate industrialization for us, with various projects underway. The largest is that of YPF-Petronas, which means a multi-million-dollar investment for our country and an opportunity to industrialize and add value to the gas resource. But precisely because they are capital-intensive investments, they demand a framework for their promotion. Only in its first stage, this project starts with an investment of $10 billion and is estimated to reach $40 billion," said Royon.

Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Production project and plant database can click here for the YPF-Petronas LNG project reports and click here for the related plant profile.

This month, the Argentine government inaugurated phase I of the Nestor Kirchner Gas Pipeline, which transports natural gas from Vaca Muerta to the Buenos Aires province. With this, the administration is seeking to develop its internal midstream infrastructure to ease bottlenecks for LNG exports. For more information, see July 11, 2023, article - Argentina Officially Inaugurates the Nestor Kirchner Gas Pipeline.

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