MercoPress. South Atlantic News Agency

YPF and Petronas announce joint LNG partnership in Argentine Patagonia

The Rio Negro location offered numerous advantages over Bahía Blanca, it was explained

Argentina's state-run oil company YPF and its Malaysian version Petronas will invest over US$ 30 billion to build a Liquefied Natural Gas (LNG) plant in the Patagonian province of Río Negro, it was announced, thus ending speculations according to which such a facility was to be or should have been settled in the Bahía Blanca area in the province of Buenos Aires.

With the plant in Sierra Grande, Río Negro, the consortium would become the fifth global LNG producer, it was explained. YPF's board of directors unanimously chose Sierra Grande after a thorough technical and economic evaluation process which found that the Rio Negro location offered significant advantages over the initial Bahia Blanca proposal.

One of these factors is that shorter pipelines are needed to transport the natural gas from Vaca Muerta, which represents lower costs and greater efficiency. In addition, the sea depth in the Sierra Grande area is greater, minimizing the need for dredging to achieve an adequate draft.

The experts also considered the availability of larger portions of land and lower interference with other social and economic activities in the area. Furthermore, the province of Río Negro offered optimal conditions for the development of the project seeking to boost the Patagonian economy.

Both companies highlighted in a statement that Río Negro has “better economic aspects for the project, even if Buenos Aires were to match the tax benefits,” according to a report from the international consulting firm Arthur D. Little. Río Negro can develop a deep water port where large “supertanker” ships can enter and lower transportation costs, it was also explained. In short, the Sierra Grande area “appears as the best option,” the document went on.

YPF and Petronas will be seeking to lure the other oil companies in the country involved in natural gas production (PAE, Total Austral, Tecpetrol, Pampa Energía, CGC, and Wintershall Dea, among others) to join a partnership for large-scale exports. Meetings with potential buyers have already been scheduled, it was reported.

Ties between YPF and Petronas date back to 2014 with the La Amarga Chica Unconventional Block development in Vaca Muerta. With a joint investment worth US$ 1.5 billion, this alliance is part of YPF's ambitious plan, which foresees an investment of US$ 10 billion over the next ten years.

The Sierra Grande LNG plant is expected to generate numerous direct and indirect jobs with the reactivation of the Punta Colorada port, which could in turn attract other industries to settle in the area.