YPF CEO: Green Light for Argentina's Gas Project with Petronas to Come in 2024
(Reuters) — Argentina's state-controlled energy firm YPF and Malaysia's Petronas expect to make a final decision next year on whether to invest in the first phase of a massive $60 billion natural gas project in Argentina, the head of YPF said on Wednesday.
The five-phase project to integrate gas production, storage, pipeline transportation and liquefaction is key for the South American country to monetize its vast reserves and become an exporter on LNG.
A delegation of technicians from Petronas traveled to Argentina in February to plan for the project. Its first phase is expected to require $5-6 billion in investment to build facilities capable of producing up to 5 million metric tonnes per year of LNG.
Drilling rigs could be imported for the upstream portion of the gas project as Argentina struggles to secure specialized equipment, YPF CEO Pablo Luliano told journalists at the CERAWeek conference in Houston.
Separately, YPF also expects to make a final investment decision this year for an oil midstream project integrating a pipeline from the Vaca Muerta region along with a terminal and a monobuoy for servicing supertankers for exports, Iuliano said. If the decision is yes, then construction could begin between late 2023 and early 2024.
The gas project with Petronas, the oil terminal and a two-phase gas pipeline connecting Vaca Muerta to the country's Northern region are needed to boost the country's oil and gas output and exports.
The gasline's first phase is set to complete construction in June, while a tender for the second phase is expected in the second quarter as the government engages in talks with funds from Saudi Arabia and China to secure bank financing, Argentina's energy secretary Flavia Royon said in Houston.
Argentina sits on one of the world's largest shale gas reserves, but the cash-strapped nation still must import fuel to generate electricity. Its energy deficit last year was estimated at some $5 billion.
Oil and gas producers are waiting for the government to send draft legislations for promoting LNGand hydrogen production to Congress, which will happen this month, Royon added.
The proposed gas law, which had been expected to be debated by lawmakers earlier this year, would encourage construction of LNG plants and related infrastructure.
"We see that law as a very good first step (to create) conditions in the future for other businesses," Iuliano said. "It's absolutely necessary."
The bill is expected to include measures to secure fiscal stability, access to currency markets and permits for companies to be able to invest in long-term gas and LNG projects, he said.
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