Possessing a massive non-conventional gas reserve in the Vaca Muerta area, Argentina is looking to bring the gas into its own pipeline system and export LNG via floating LNG facilities
The name of what is believed to be the world’s second-largest shale gas deposit’s location gives a hint about its accessibility and environmental conditions. Vaca Muerta (Dead Cow) is located far inland from the coast, mainly in the province of Neuquen but across three others, and at a distance of about 1,100 kms from Buenos Aires and about 700 kms from the closest port of Bahía Blanca. This adds to the complexity of the logistics.
Now the Malaysian state-owned oil and gas company Petronas and its Argentinian equivalent, YPF, have joined forces to set up a floating LNG production facility in the port of Bahía Blanca. This will be part of the Argentina GNL project that both companies signed a few months ago and includes upstream gas production, dedicated pipelines and infrastructure development, LNG production, marketing and shipping.
This is a bold move for both companies that makes sense because of their respective expertise. Petronas has already invested in Vaca Muerta and it needs to expand its operations outside Asia. YPF, on the other hand, benefits from a global market and provides local expertise and plenty of talented personnel.
Apparently, the goal is to start exporting LNG in 2027, and construction of the FLNG unit seems to have started already. Other sources mention that Petronas might be considering building a second floating LNG production facility and using an existing third unit, too. The goal would be to reach 9M tonnes of export capacity per annum. On top of all these floating production units, a shore-based LNG production facility, with capacity for another 20M tonnes per annum, is already in pre-FEED status. The use of floating LNG units was already tested by YPF, when it used the Tango FLNG unit (now Congo FLNG) in Bahía Blanca.
Where will all this gas go? Well, the first obvious destination is Brazil, an enormous economy that is already worrying about reduced volumes of gas it is getting from Bolivia. Some might arrive via pipelines, but surely a combined capacity of importing gas via pipelines and ships would be attractive for the Brazilians. Argentinians, in the meantime, see this as a realistic opportunity to get their economy in much better shape.
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