A megaproject and two alternatives

By Juan Pablo Carvajal and Mariela Branda

The energy potential of Vaca Muerta has among its main projects the installation of a natural gas liquefaction plant that would imply a million-dollar investment, as well as the generation of jobs and the growth of infrastructure for which there are two ports in competition. , one in the province of Buenos Aires (Bahía Blanca) and another in its neighbor Río Negro (Sierra Colorada).

The ambitious initiative that YPF has in the pipeline together with the Malaysian state firm Petronas consists of the construction and start-up of a scalable plant that would begin with a floating stage and then move on to the land stage. It plans a total investment of USD 50,000 million throughout the life of the project, with exports of more than USD 13,000 million annually. In phase 1 of industrialization, the installation of two liquefier ships is planned and in the second phase, the construction of a scalable plant with a final production capacity of 25 million tons per year, which is equivalent to 465 methane tankers.

It should be noted that LNG is natural gas that has been processed and transformed into a liquid state. When natural gas liquefies, it maintains its mass (kg), but its volume decreases 600 times and that is why LNG can be easily transported in ships or tanker trucks.
Liquefaction is carried out in highly complex industrial plants and is obtained by cooling the natural gas to 162°C at atmospheric pressure.

For the start-up, there are two enclaves under study that could have the green light for the installation of said plant, one in the city of Bahía Blanca in the south of the province of Buenos Aires and another in a town in the neighboring Río Negro in the department of San Antonio.

Although the project had its genesis in 2017 where conversations began between the Port of Bahía Blanca for the development of a liquefaction project, in April 2024 it was announced that Río Negro was joining the competition, generating speculation and opening a window of uncertainty.

Two positions

Each of the provinces works to obtain approval. In Buenos Aires, Governor Axel Kicillof signed a decree declaring “of provincial interest the initiative presented by YPFSA and the Malaysian state company Petronas, for the installation of a natural gas liquefaction plant in the Port of Bahía Blanca, the necessary infrastructure to its concretion and the carrying out of studies related to the maritime, land, technical, economic and environmental issues related to the exploitation of liquefied natural gas in Argentina”. This initiative had the endorsement of the entire political spectrum in the Legislature of the province, as well as the national representatives of the Province in Congress, where the mayor of Bahia Federico Susbielles was entrusted with the task of obtaining the greatest support in both. parliaments.

On the Rio Negro side, Governor Alberto Weretilneck also obtained local support from mayors and legislators for the installation of the plant in the San Matías Gulf. To this sum of support was added Governor Rolando Figueroa who is bidding together with his neighboring province, with whom they also share the Vaca Muerta deposit and have in the Port of Punta Colorada the development of the “Vaca Muerta South” project with the construction of a oil pipeline from Neuquén to Sierra Grande, which will be a port and the first Argentine port dedicated exclusively to the export of oil and fuel, in addition to highlighting the potential of the Patagonian region.

With the cards on the table and highlighting each of the competitive advantages, the two ports and their representatives seek to exert strength to retain the last word of YPF and Petronas for the completion of this ambitious project that will not only move the entire local economy with the generation of labor, but also promises to have enormous future potential in terms of development and infrastructure.

From YPF they avoid the dispute: “It will be defined based on technical criteria”

The state oil company is in the full analysis stage regarding the megaproject where the LNG plant that it will build in association with Petronas will be located. Company sources consulted by La Tecla indicated that the definition “has not yet been taken” and denied any certainty, beyond the fact that both provinces assure that they already have the approval. “The two locations are in the process of analysis and the decision will be made based on technical criteria,” they warned.

For YPF, the project has strategic importance, much more so now that the Senate gave its approval to the Large Investment Incentive Regime (RIGI), without which they had assured that there was no possibility of the initiative being carried out. Although the latest progress is missing in Deputies, it is assumed that, with the support of the governors, it will be approved.

In this sense, President Horacio Marín expressed himself a few days ago: “Without the RIGI there is no LNG in Argentina, because it is a project that requires three gas pipelines like the Néstor Kirchner for infrastructure, and that is US$6,000. millions”. For his part, in a recent presentation during Midstream Day, YPF’s Vice President of Infrastructure, Gustavo Gallino, referred to the Vaca Muerta Sur project, which Río Negro will be built, and to LNG, but avoided giving details about the location of this project. last.

“Argentina has a geopolitical peculiarity. The logistics to reach the gas consumption markets is complex and high costs, which is why the promotion regimes for this type of investment make these initiatives viable. We have to work to convert our resources into wealth. We understand that we must add the entire industry to this project where we are with Petronas as a partner,” he added.

Finally, he expressed: “The objective in the first stage is to process 20 million cubic meters of gas. It will be scaled up with a second ship and with the facilities on land it will reach 25 million tons in 2032.”

Port advantages, connectivity and industrial development

Governor Axel Kicillof took the lead and declared the establishment of the LNG plant in Bahía Blanca of provincial interest. In this sense, the president highlighted that the city “has specialized terminals, modern port infrastructure and cutting-edge technology, being a reference at the national and regional level, guaranteeing navigability every day of the year and having developed land connectivities.”

Likewise, the Minister of Production, Augusto Costa expressed that “this project is going to change the perspectives of the province and the country. “We see no reason for it to be questioned.”

Regarding the initiative, the mayor of Bahía Blanca, Federico Susbielles, told La Tecla that “the project began work 7 years ago, it had a very important degree of progress with a reserve in 2022 of more than 1,500 hectares of land in the Bahía Blanca port, and since that moment multiple technical studies have been carried out between Petronas and YPF such as environmental impact studies, navigability, operational situations.

Along these same lines, the community leader highlighted that “at the time the technicians saw that the most affordable and most convenient technical possibility for this project was the port of Bahía Blanca. We are aware that a new evaluation of projects with some alternative in the province of Río Negro has been reactivated, as happened in 2010.”

Regarding the operational advantages, Susbielles considered that “the port of Bahía Blanca is much safer to be able to work with ships, because the first stage of the project is offshore, over the water. But apart from that, Bahía Blanca has logistical circumstances, it has national routes, provincial routes, it has an already developed petrochemical industrial hub and would also allow value to be added more quickly. It has trained human resources, it has a proven community and environmental essence, because we are a territory in which there is great industrial production and it seems to us that there is a great superiority with a city where we are all working together without political flags.”


Incentive package and use of Vaca Muerta Sur infrastructure

The possibility of installing the LNG megaproject in Punta Colorada has been latent for several years. In the Province they assume that the town of Sierra Grande will be chosen and although they prefer to avoid the media dispute with Buenos Aires, sources from the Government and the Municipality confided to La Tecla that they are working on an incentive scheme to “seduce” to the state oil company. The intention is to turn the town into a large energy hub, taking advantage of the infrastructure that is being developed for the Vaca Muerta Sur project and also taking into account, in the future, the potential that the development of green hydrogen will have there.

“The Vaca Muerta Sur Pipeline is beginning to become a reality. With our sights set on building a more federal country, Neuquén and Río Negro set out to promote energy development and we are already taking the first steps,” said Governor Alberto Weretilneck.

The province is working on a series of concessions to provide tax benefits. “We are going to give absolute exemptions from all provincial taxes for the first and second rings for the duration of construction and then, we are going to provide guarantees of stability through specific laws and we are going to raise the jurisdiction of the courts. We want to be very specific, supportive and transparent so that with everything that is generated with Vaca Muerta Sur or with LNG, the industry knows that it has economic, financial and legal guarantees with the Río Negro Sea,” added the provincial reference.

In addition, the Legislature presented a letter to YPF a few days ago assuring that the project will be complemented with the Vaca Muerta Sur and will allow the generation of an energy development pole in Patagonia “with minimal interruption to the local ecosystem compared to the already congested Puerto de White Bay”. The mayor of Sierra Grande, Renzo Tamburrini (UxP), also expressed himself: “The project renews expectations in Sierra Grande. It represents a need that is beginning to crystallize. It means an enlargement of the local economy that includes both commerce and the business sector as well as workers.” The LNG installation in Rio Negro has the support of the opposition in the province and also in Neuquén.

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