Oil and gas company YPF is in search of new investors to construct a new liquefied natural gas (LNG) plant in Río Negro. It was slated to build the project together with Petronas, but the participation of the state-owned Malaysian energy giant is now in doubt, a source from YPF told the Herald. 

“There are some differences with Petronas regarding the development of the project that lead us to believe that they are thinking of leaving,” the source said, clarifying that there is no official confirmation yet. Regardless of the Malaysian company’s decision, however, the project is expected to continue. 

Río Negro Governor Alberto Weretilneck confirmed that construction of the LNG plant will move forward. “From what I have discussed with [YPF President Horacio] Marín, YPF will continue with the project, either with Petronas or other partners,” Weretilneck said in an interview with media outlet Radio con Vos Patagonia when asked about news circulating that the Asian oil giant may be pulling out. 

“There are commercial and financial negotiations between the two oil companies, but the plant is not in risk.”

A Río Negro government source relayed the same message to the Herald. “YPF is guaranteeing that the project in Sierra Grande will move forward,” they said. “If Petronas steps down, they will search for other companies.”

The Malaysian Embassy declined to comment on the issue.

The LNG plant made headlines in Argentina as the location of the project led to a competition between Río Negro and Buenos Aires. In an effort to secure the joint venture between YPF and Petronas, the Patagonian province became the first to officially adhere to Argentina’s new Large Investment Incentive Regime (RIGI, by its Spanish initials) on July 12. BA Governor Axel Kicillof, fiercely opposed to President Milei, declined to join the RIGI and announced a special regime of his own to encourage investments. 

Río Negro finally outbid Buenos Aires province’s proposal to build the plant in Bahía Blanca. Instead, the project will be located in the area of Punta Colorada, in the Patagonian town of Sierra Grande, Río Negro province. An old, unused port with an outlet to the Atlantic Ocean will also be developed and modernized.

The project is currently in the stage of searching for power purchase agreements (PPA). PPAs are long-term contracts between the energy provider, in this case YPF, and potential traders that determine the amount of future buyers for the company’s product. The process to secure financing will begin once all the PPAs have been placed and confirmed.