In a bold bid to secure Argentina’s place in the global energy market, YPF, the leading energy company in Argentina, has set its sights on India for a long-term liquefied natural gas (LNG) deal. YPF officials, including CEO Horacio Marin, recently visited India, engaging with energy companies such as Petronet LNG Ltd. to lay the groundwork for Argentina’s future as a key LNG exporter. As Marin revealed in an exclusive interaction with Financial express Online, India is seen as a critical market for Argentina’s ambitious plans to develop its Vaca Muerta shale gas reserves.
Vaca Muerta and the Argentina LNG Project
YPF and its strategic partner Petronas are spearheading a massive LNG project that is set to be one of Argentina’s most significant energy initiatives in decades. The project, located on the east coast of Argentina, 600 km of Vaca Muerta shale formation, is expected to see exports start from floating liquefaction units by 2029, with an onshore terminal following by 2031. The scale of the project—aimed at producing 30 million tons of LNG annually—places it among the world’s largest.
Marin has been candid about the need for financial backing to bring the project to life, stating, “This project is project finance. You cannot finance yourself because the quantity of money you have to invest in the LNG plant is huge for any company.” The prospective deals with global buyers, including India, are key to securing the billions of dollars needed to fund the initiative.
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The Strategic Importance of India
For YPF, India is more than just a potential buyer; it represents a cornerstone of Argentina’s strategy to diversify its energy markets. Marin’s visit was aimed at opening negotiations and building long-term relationships with Indian energy firms and government officials. “India will be the engine of the world in the next decade,” Marin said. “I know you don’t have the gas reserves, and so we thought it would be very important for your country to have secure delivery of the gas so you can plan your growth.”
India’s growing demand for energy and its need to diversify its sources make it an attractive market for YPF’s LNG exports. Marin emphasized the strategic fit between Argentina and India, noting the long-standing diplomatic ties between the two nations. “There is a good relationship between Argentina and India,” he said. “And this project is about more than just small buyers; it’s about building a long-term relationship.”
Overcoming Argentina’s Past Challenges
Argentina’s LNG ambitions have faced delays and hurdles in the past, but Marin believes that the current economic and political landscape is far more favourable. “Five years ago, Vaca Muerta was just beginning,” he explained. “At that time, we didn’t have the legal framework, the infrastructure, or the financial stability to support such a large-scale project.”
However, recent legislative changes in Argentina, including the passage of the “Regime for Large Investment” (RIGI) law, have provided the regulatory stability needed to attract foreign investors. “This law is very good not only to make LNG competitive but also from the regulatory standpoint. It ensures stability for investors and provides mechanisms like international arbitration, which weren’t available before,” Marin said.
He added that YPF’s efforts are now focused on securing buyers to enable financing. “As soon as it’s competitive, now we need the buyers. When you have the buyers, you can go to the banks,” he noted, highlighting the importance of potential Indian contracts in pushing the project forward.
India’s Role in the Global LNG Market
India, already one of the world’s largest LNG importers, is expected to see its demand soar as it continues to industrialize and urbanize. Petronet LNG Ltd., India’s largest buyer of the supercooled fuel, has been a key player in discussions with YPF, but Marin was clear that negotiations are still in the early stages. “The purpose of my traveling here is to open the negotiation,” he said. “We don’t know what will happen, but the important thing is to start the conversation and show that our project is very competitive.”
Marin hinted at the possibility of Indian companies becoming more involved in the project as it progresses, though he emphasized that the primary goal for YPF is to secure off-take agreements for the LNG. “We are open to investment from Indian companies, but our main focus is on securing off-takers. If the volume is large enough, we can consider more involvement from Indian firms,” he explained.
A Long-Term Vision for Global Energy
The scale of YPF’s LNG project is nothing short of transformative for Argentina’s energy sector. If all goes according to plan, Argentina could become the world’s fifth-largest exporter of LNG by the early 2030s. Marin acknowledged that it has taken time for Argentina to reach this point, but he remains optimistic about the future. “It was delayed, but today we are prepared. We have the resources, the law, and the financial tools to move forward.”
Despite the challenges of the past, Marin remains hopeful that Argentina’s LNG project will play a crucial role in meeting the world’s growing energy demands. “India will need gas, and Argentina can be one of the sources to provide it. Energy is key to lifting people out of poverty and driving economic growth,” he said.
Looking Forward: A Critical Year Ahead
The next year will be pivotal for YPF and its LNG ambitions. Marin indicated that the final investment decision (FID) for the first phase of the project, involving the floating LNG units, is expected by the end of 2025, with the goal of starting gas deliveries by 2029. The onshore LNG terminal is planned to come online by 2031, further cementing Argentina’s role in the global energy market.
In the meantime, Marin’s focus remains on securing the key off-take agreements that will allow YPF to move forward. “Our goal is to sell the gas from Argentina for the next 20 years,” he said. “We believe India will be a big part of that future.”
From: financialexpress
Financial News
