YPF president Pablo González has backed a bill to declare that liquefied natural gas (LNG) production for export is in the national public interest. He described it as key for increasing foreign investment in Argentina, and asked for a regulatory framework for YPF to be able to start its gas production agreement with Malaysian oil and gas company Petronas.
The bill is intended to encourage infrastructure investment for natural gas transport, storage and sales in Argentina and abroad. It also includes tax benefits for companies that commit to producing a certain volume of LNG per year.
On Tuesday, González and the company’s chief executive, Pablo Iuliano, gave a presentation at a congressional commissions plenary session on the LNG production bill in the Chamber of Deputies. It was sent to congress by Economy Minister Sergio Massa, with the support of YPF and Petronas.
The project to produce LNG in the country would require US$50 billion of investment over the next 35 years, according to González.
The YPF president said that “a regulatory framework is needed to move forward with the project signed with Petronas” for the construction of the first LNG plant, which would allow Argentina to export the resource.
“We need to reach the production level of our main competitor, the Gulf Coast, thinking about U.S. shale,” Iuliano said. “We are competitive enough to do what they do, just like they do, but here.”
González described Petronas as “a strategic associate with over 40 years of experience in the industry,” adding that the company is the fourth-biggest LNG producer in the world and has been a YPF associate since 2014.
YPF and Petronas’ agreement includes producing gas in Vaca Muerta, transporting it to the terminal via a 620 km pipeline, and liquefying it.
The estimated investment is of US$10 billion during the first stage, which would allow the companies to produce up to 5 million tonnes of LNG a year, they say. It’s estimated that within 10 years of the project’s completion, more than 25 million tonnes will be produced and exported each year.
Gas value chain
“This law will definitely benefit my province and the whole country,” said Neuquén governor-elect Rolando Figueroa.
“[This bill] will allow us to be internationally competitive with our own production. It will allow us to grow and generate US$20 billion in exports over the coming years.”
Opposition coalition Juntos por el Cambio Deputy Pamela Varsay said the bill dealt with specific businesses rather than a broader energy policy, adding that other market participants should be allowed to give their views. “Let’s change the name of the bill, then,” she said.
Deputy Alejandro “Topo” Rodríguez complained that no other government officials were invited to give presentations at the plenary session, but said he was honored to have YPF authorities there.
“Gas liquefaction is a state policy present in the main presidential candidates,” he added.
If approved, the bill will “generate value for the entire production chain”, from gas extraction to transport and export, as well as projects such as pipeline construction, oil engineer and president of Contactos Energéticos Foundation Luciano Fucello told the Herald. “It’s very positive, for both national companies and international investors.”
However, he said that the LNG plant will take around five years to be built and will need to pass through several stages before it is complete.
Energy Secretary Flavia Royón has been invited to the next commissions session to discuss the bill, a government source told the Herald.