Argentina’s state-run oil company YPF and Malaysia’s Petronas have announced a landmark investment of over $30 billion to construct a Liquefied Natural Gas (LNG) plant in Sierra Grande, Río Negro. This decision ends previous speculation about the plant’s potential location in Bahía Blanca, Buenos Aires.
The new plant will position the consortium as the world’s fifth-largest LNG producer, with YPF’s board choosing Sierra Grande following a comprehensive technical and economic evaluation. The site offers several advantages, including shorter pipeline requirements from the Vaca Muerta shale formation, reducing costs and increasing efficiency. Additionally, the greater sea depth in the area minimizes dredging needs, facilitating the accommodation of large “supertanker” ships and lowering transportation costs.
Río Negro’s larger land availability and minimal interference with other social and economic activities further solidified its selection. The province’s commitment to the Large Investment Incentive Regime (RIGI) since July 12 provided a critical edge over Buenos Aires. An in-depth study by the consulting firm Arthur D. Little highlighted these benefits, emphasizing the optimal conditions for boosting the Patagonian economy.
The plant will be constructed at Punta Colorada, a location with a 40-meter sea depth seven kilometers from the coast, providing free access for large vessels. The area’s proximity to national route number 3 and the San Antonio Oeste Airport enhances logistical advantages. The development includes modernizing an old, unused port with an outlet to the Atlantic Ocean.
YPF and Petronas plan to engage other natural gas producers in Argentina, such as PAE, Total Austral, Tecpetrol, Pampa Energía, CGC, and Wintershall Dea, to join the partnership for large-scale exports. Meetings with potential buyers have already been scheduled.
The YPF-Petronas relationship began in 2014 with a $1.5 billion investment in the La Amarga Chica Unconventional Block in Vaca Muerta. This new joint venture aligns with YPF’s ambitious 4×4 plan, which aims for $10 billion in investments over the next decade.
The Sierra Grande LNG plant is expected to generate significant employment opportunities and attract other industries to the area, particularly with the reactivation of the Punta Colorada port. This development will also bolster Río Negro’s ambition to establish itself as a mining and energy hub, complementing its existing mining quarries and energy infrastructure projects.
Neuquén Governor Rolando Figueroa remarked, “Today could be a great day for the people of Patagonia. The port in Río Negro will be a great opportunity for the region,” underscoring the project’s potential impact on the local economy and community.
