Javier Milei will sign a key agreement in Italy for the Argentine LNG project

YPF and Italian company Eni will sign a key agreement next Friday in Rome that will allow progress on the third stage of the "Argentina LNG" project, according to sources close to the state oil company.

The document, a preliminary agreement or heads of agreement, sets out the essential guidelines for a future Final Investment Decision (FID), which is expected to be finalized before the end of the year.

The cooperation covers the entire process: from natural gas production in Vaca Muerta, its transportation, the liquefaction stage, and LNG export. In this new phase, plans call for the installation of two floating liquefaction units in the province of Río Negro, each with a capacity of 6 million tons per year (MTPA).

The signing will be led by YPF president Horacio Marín and Eni CEO Claudio Descalzi, who had already signed a Memorandum of Understanding (MOU) in April. The event will be attended by President Javier Milei, who will be in Italy as part of his international tour. Italian Prime Minister Giorgia Meloni will also participate. After the event, both leaders will share a private meal.

The MOU (Memorandum of Understanding), the preliminary agreement, and the Final Investment Decision (FID) are successive stages within an investment process. If the agreement is reached, Argentina will become the fifth largest exporter of liquefied natural gas by ship in the world.

The MOU represents a non-binding preliminary understanding that expresses the willingness to move forward with an initiative; the Heads of Agreement serves as an intermediate agreement that defines the main points of a future contract, although it is not yet binding; and the FID is the definitive resolution, in which the company formally approves the investment and initiates the project execution. YPF is confident it will reach this final stage before the end of the year.

The Argentina LNG project

The company is leading the development of the Argentina LNG project, a strategic initiative to leverage Vaca Muerta's gas resources and position the country as a reliable energy supplier on the international stage.

The goal is to achieve annual exports of liquefied natural gas (LNG) worth 15 billion dollars by 2030. The plan includes the installation of six floating liquefaction units in the San Matías Gulf, in the province of Río Negro.

These platforms will jointly produce about 28 million tons per year (MTPA), which is equivalent to approximately 141 million cubic meters of natural gas per day, a figure close to the current total local production. The number of vessels is comparable to the total number of floating plants in operation worldwide, according to a report published by the International Gas Union (IGU) in mid-2024.

The first concrete step toward LNG export from Argentine territory will take place in 2027, when the floating unit Hilli Episeyo begins operations. This vessel, owned by Norwegian company Golar and managed by Southern Energy, will be responsible for launching operations of the ambitious "Argentina LNG" project.

The Government has also given the green light for the first stage of the project to be included within the benefits of the Large Investment Incentive Regime (RIGI), thus supporting an investment commitment of 7 billion dollars over the next 20 years.

The Southern Energy consortium, responsible for carrying out the initiative, is made up of Pan American Energy (30%), YPF (25%), Pampa Energía (20%), Harbour Energy (15%), and Golar LNG (10%). The floating liquefaction unit will have a production capacity of 2.45 million tons per year (MTPA), equivalent to 11.5 million cubic meters of natural gas per day, and will become the first vessel of its kind to operate in the San Matías Gulf.

Meanwhile, Southern Energy will move forward with the construction of its own floating unit called "MKII," aimed at strengthening the project's capacity in this initial phase.

Starting in 2028, the plan will take a significant leap with the Argentina LNG 2 and 3 phases, which will increase total production capacity by an additional 22 MTPA. In the second phase (2029-2030), YPF will form a strategic partnership with Shell and three other major international players yet to be identified.

This stage is estimated to require an investment of up to 12 billion dollars and will include the construction of two proprietary floating liquefaction units (FLNG) and a new dedicated gas pipeline.

Meanwhile, the third phase of the project —Argentina LNG 3— is scheduled between 2028 and 2029, and will add another 12 MTPA to the installed capacity. This stage is now advancing with the signing of a preliminary agreement with Italian energy company Eni.

In addition to the projected growth in LNG exports, a significant expansion in external oil sales is expected, which could generate another 15 billion dollars per year by 2033. Together, LNG and crude oil could contribute about 30 billion dollars annually in foreign currency, a figure comparable to that of the agricultural export sector, and key to addressing the historic problem of dollar shortages in the Argentine economy.