Argentina completes its first ever LNG shipment

With a cargo of about 25,000m3 of Vaca Muerta shale gas offloaded from the Tango liquefying vessel, state-owned gas giant YPF has completed its first LNG export shipment.

According to a release by Tango owner Exmar, from which YPF leased the unit for 10 years, completion was achieved in record time. The leasing contract was signed in November, while Tango arrived to the port city of Bahia Blanca in February.

The news marks a milestone for Argentina, as the country had never completed an LNG shipment to another country before. Also, it highlights YPF’s commitment to seeking avenues to export natural gas in the medium term to offset lowering local demand and dropping prices. In the last few months, the company has had to drop gas production considerably as the local gas market becomes oversupplied.

However, the situation is expected to reverse during winter, in which Argentina has traditionally struggled to meet local demand. Full operation of the Tango LNG is thus expected to start after winter, which Exmar confirmed in its release. YPF has said this first shipment will serve as a test to see if exporting LNG is a viable business strategy in the long term.

As BNamericas reported on Monday, the cargo was transferred to the Fuji LNG vessel, which is expected to ship from Argentina’s coast soon to transport it to an undisclosed buyer.

While YPF and the energy ministry have shown interest in increasing the country’s exports beyond neighboring Chile, liquefaction capacity is currently lacking.

The government has estimated investments of US$2-3bn would be needed to begin large-scale LNG exports. YPF, however, together with a consortium of companies, has been considering building a liquefaction plant for an estimated US$5bn with 24Mm3/d process capacity.

A recent report by BNamericas analyzes the state of the LNG market in Argentina particularly and Latin America generally.