KUALA LUMPUR (Dec 7): Petroliam Nasional Bhd (Petronas) and Argentina's state-backed energy company YPF plan to look for partners to help build a US$10 billion (RM43.96 billion) liquefaction terminal and related infrastructure, a key for boosting output from the Vaca Muerta shale play.
Citing an unnamed company source, S&P Global Commodity Insights on Tuesday (Dec 6) said the companies signed a memorandum of understanding for the project in September, saying that the target is to reach 25 million MT a year of liquefied natural gas (LNG) exports in 10 years.
The source said the five-train liquefaction terminal will be built in Bahía Blanca, a port in the southern Buenos Aires province, and will be supplied by a dedicated pipeline from Vaca Muerta in northern Patagonia.
YPF, the biggest gas producer in Argentina, and Petronas plan to look for partners for building and financing the plant in modules, helping to stretch out the capital requirements, the source said.
As a first step, the source said they will build the pipeline to deliver gas to two floating liquefaction terminals supplied by Petronas.
The exports from these vessels will help bring in the revenue for paying for the construction of the onshore terminal.
Pivotal law
A key for moving forward with the project is the approval of a bill designed to promote investment in LNG export infrastructure.
"The bill is a priority," the source said.
Without the legal, regulatory and tax stability that the law would provide, it will be hard to attract investors for the project and buyers for the LNG, the source warned. Argentina has a reputation for sudden changes in regulations and taxes that have made it difficult to fulfil export contracts or curbed profits, exposing sellers to legal challenges.
The source said the bill is expected to go to Congress during the extraordinary sessions that run from December to the end of February.
If the bill is approved, YPF and Petronas will sign a contract for the project and begin to arrange partners, including for supplying gas for export.