Argentina’s state-run oil firm, YPF SA, is accelerating plans to construct a $5 billion natural gas export terminal despite the political and monetary chaos rocking the nation.
The driller, which has led the development of the nation’s Vaca Muerta shale trove, is in talks with potential international and domestic partners over designs for a liquefied natural gas facility. However, the backdrop for these discussions has shifted dramatically after opposition candidate Alberto Fernandez beat market-friendly President Mauricio Macri in a critical primary vote last month, sending shares of Argentine companies descending on issues that more protectionist authorities will take power.
Argentina faces stiff competitors for LNG buyers as suppliers from the U.S. to Australia increase exports, including to a world overabundance and sending costs for the fuel tumbling. However, the YPF terminal could benefit from its location in the southern hemisphere, the place seasonal fuel use ebbs when it’s coldest in Asia and Europe, boosting heat demand in these areas.
The Tango is floating LNG facility, which freezes gas into liquid for shipment abroad, has been ramping up manufacturing on Argentina’s Atlantic coast because it readies the nation’s first full cargo of the fuel, to sail on the end of October. Tankers will go away the Bahia Blanca port every 40 days or so till May 2020, when Argentina’s winter starts and domestic gas demand surges. Exports will resume this time next year.
However, the barge can solely produce 500,000 metric tons a year of LNG, in contrast with world trade of about 290 million metric tons in 2017. A more massive terminal that gives Argentina access to big importers in Asia is key to unlocking production in Vaca Muerta; the place drillers face weak demand for much of the year.