Argentina has taken a decisive step in its natural gas liquefaction strategy with the formation of the Southern Energy consortium, following YPF’s entry as the fifth member. This development strengthens collaboration among key industry players and paves the way for the deployment of a floating liquefaction unit in Río Negro—an initiative set to position the country as a major LNG exporter.
The Southern Energy consortium was initially established by Pan American Energy (PAE) and Golar LNG, aiming to capitalise on Argentina’s vast gas reserves for international markets. The inclusion of YPF, alongside Pampa Energía and Harbour Energy, fortifies the financial and operational foundations of the project. The consortium’s shareholding structure is as follows:
This partnership leverages the expertise and infrastructure of leading energy firms to ensure the project's success.
State-controlled YPF has committed to supplying 16.67% of the required natural gas volumes for the floating liquefaction unit from its Vaca Muerta operations. This move reinforces its leadership in Argentina’s unconventional gas development.
According to YPF’s President and CEO, Horacio Marín, the agreement represents “another important step in advancing Argentina LNG, a project we are leading at YPF but developing alongside all industry stakeholders”. This collaborative approach underpins the Argentina LNG initiative, which aims to establish the country as a competitive LNG exporter.
The consortium has earmarked an initial investment of USD 2.9 billion over the next ten years for the installation of the Hilli Episeyo floating liquefaction unit, which will have a production capacity of 2.45 million tonnes per year of LNG, equivalent to 11.5 million cubic metres of natural gas per day. Commercial operations are scheduled to begin in 2027.
Over its 20-year lifespan, the total investment is projected to reach USD 7 billion, generating significant employment opportunities, fostering local supplier development, and introducing new technological processes. Additionally, it will enable Argentina to diversify its energy exports and access new international markets.
This project represents a pivotal moment in Argentina’s energy strategy, positioning the country as a key player in the global LNG market. The combination of vast Vaca Muerta reserves, robust infrastructure, and strategic partnerships places Argentina in a strong position to meet rising global LNG demand.
Furthermore, the initiative contributes to energy independence, allowing Argentina to maximise its natural resources and reduce domestic market volatility. With LNG emerging as a critical driver of growth, the country is aligning itself with global trends favouring flexible and lower-emission energy sources.
YPF’s entry into the Southern Energy consortium marks a milestone for Argentina’s energy sector. With billions in investment, job creation, and the potential to reshape Argentina’s energy exports, the project is poised to redefine the country’s role in the international energy market.
As Argentina moves towards 2027 and the deployment of Hilli Episeyo, all eyes will be on how this ambitious project unfolds. One thing is certain—the nation is taking bold steps towards securing a strong and sustainable presence in the global LNG industry.
