New Hydrocarbon Projects Move Forward Under Argentina's RIGI

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

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Summary

Los Toldos II Este has been approved under Argentina's RIGI scheme, while YPF and its partners have submitted its Argentina LNG project for consideration under it. Los Toldos II Este is the sixth oil and gas projects approved under the RIGI, while more than 40 projects entered the program's approval process.

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Another RIGI Project

Argentina's Economy Minister Luis Caputo announced that Tecpetrol and GyP's Los Toldos II Este project was approved under the country's Incentive Regime for Large Investments (RIGI). Meanwhile, YPF and its partners submitted their US$51 billion liquefied natural gas (LNG) project for consideration under the RIGI.

The RIGI is an incentive scheme for companies investing in infrastructure, energy, oil and gas, the mining sector in projects of at least US$200 million. It aims to guarantee long-term fiscal and legal stability through tax cuts, import duty reductions, foreign exchange incentives, legal stability and more.

The newest project approved under the RIGI is Los Toldos II Este, owned by Tecpetrol (90%) and GyP (10%) in Vaca Muerta. Caputo said investments through the project's life are estimated at US$6.4 billion, with output expected to reach 35,000 barrels of oil per day (bpd) by early 2027 and 70,000 bpd by July 2027.

The project is expected to generate almost 8,000 direct and indirect jobs. Los Toldos II Este joins Rincon de Aranda as the only shale projects so far approved under the RIGI. In contrast, others such as Bajo del Choique-La Invernada and LLL Oil remain under evaluation.

Vaca Muerta production is increasingly dominating Argentina's oil volumes, accounting for 69% of the total output of 903,700 bpd recorded in May. YPF's chief executive officer suggested that Argentina could produce more than 1 million bpd by yearend as new oil fields come online.

Argentina's expanding hydrocarbon production is playing an increasingly important role in the country's economy. According to Caputo, Argentina's goods exports in July totalled US$8.8 billion, a 14.1% year-on-year increase and marking a new record for July. Exports of fuels and energy grew 97.8% year on year, representing by far the largest annual increase.

Meanwhile, natural gas developments do not stay behind. In August, YPF, Eni and XRG submitted a RIGI application for their Argentina LNG project, which aims to export 12 million tonnes of LNG per year through two floating liquefied natural gas units (FLNG) from Rio Negro's Gulf of San Matias.

The natural gas produced in Vaca Muerta's shale will be transported to processing facilities at the coast before being exported.

Cunmulative investments throughout the project's life are estimated at US$51 billion, the largest private investment in Argentina's history and the biggest submitted for the RIGI. The Argentine company expects the project to generate some US$10 billion per year in exports over two decades.

YPF is partnering with Eni and XRG to deliver the project, with LNG production expected to begin by 2031. Investments in the FLNG facilities, industrial complexes, dedicated pipelines and port facilities are forecast to reach US$24 billion, and another US$5 billion is destined for upstream development to drill wells and supply the liquefaction plants.

Los Toldos II Este is the sixth hydrocarbon project approved under the RIGI, while more than 40 projects across all sectors have entered the regime's approval process.

Key Takeaways

• The government has approved Tecpetrol's US$6.4 billion Los Toldos II Este project under the RIGI.
• The upstream project is expected to produce 70,000 bpd of oil by July 2027.
• YPF also submitted its Argentina LNG project to the RIGI, with a forecasted value of US$51 billion.

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