Argentina LNG: Midstream projects outlined as Southern Energy opts for Río Negro

Argentina’s LNG story took another twist on Monday when Southern Energy said it would begin exporting the fuel from Río Negro province.

That is the same province from where the country’s biggest hydrocarbons producer, state-controlled YPF, has said it wanted to begin exports.

Owned by upstream company Pan American Energy (PAE) and energy logistics firm Golar LNG, Southern Energy is planning to export from 2027 via a liquefaction vessel moored in the San Matías gulf.

Under a July agreement, vessel Hilli Episeyo, with LNG production capacity of 2.4Mt/y, the equivalent of 11.5Mm3/d (million cubic meters per day) natural gas, would be used. PAE would supply the gas. 

Factors cited behind the Río Negro decision include water depths, along with windspeeds and wave size. 

Southern Energy said the ship would initially be supplied with gas pumped through existing transport infrastructure during months of the year when domestic demand slackens in Argentina, which are the warmer ones.

Additional works would be needed: a trunk infrastructure connection, a compression station, a duct to carry gas to the coast, a subsea pipeline and mooring facilities.  

A stretch of trunk pipeline General San Martín is about 25km from the coast. Operated by concessionaire TGS, the duct runs from Tierra del Fuego province, passing through Santa Cruz and Chubut – all three hydrocarbon-producing jurisdictions. Capacity is 41Mm3/d, with 27.2Mm3/d injected in 2022, according to data from regulator Enargas. 

Second phase LNG project work involves building transport installations that would allow for the vessel to operate year-round, Southern Energy said, citing the proximity of the San Matías gulf to the Vaca Muerta unconventional hydrocarbons formation.

Southern Energy said it was holding talks with other sector firms about potentially getting involved in the project.

Meanwhile, this year YPF said it would begin exports from Río Negro under a partnership with Malaysian counterpart Petronas. 

YPF, following a press report that Petronas may exit the project, said that if that happened it would carry out the work regardless and that there were other potential interested partners.

Based on past YPF comments, production capacity of 1-2Mt/y is expected to start from 2027 using floating LNG infrastructure moored in the gulf, before ramping up to over 17Mt/y by 2032 following construction of a fixed plant onshore. 

Río Negro has adhered to the federal government's Rigi investment-incentives regime.

Argentine gas production is around 152Mm3/d. Offshore Tierra del Fuego gas platform Fénix recently came online, with production capacity of 10Mm3/d expected. Involving investment of around US$700mn, Fénix is part of the Cuenca Marina Austral 1 (CMA-1) concession, in which TotalEnergies holds a 37.5% operating interest, alongside its partners Harbour Energy (37.5%) and PAE (25%).