Argentina's Chief of Staff, Guillermo Francos, announced that YPF will sign an agreement with an international oil company for its mega LNG project. According to Forbes, it will be a Memorandum of Understanding (MOU) with Shell.
Francos revealed that the state-owned oil company will sell a third of the gas produced in Vaca Muerta, the massive oil and gas field shared by the provinces of La Pampa, Neuquén, Río Negro, and Mendoza.
The Chief of Staff mentioned that YPF will sign the agreement with one of the world’s largest companies, valued at $140 billion. The contract will span 20 years. With this, the government ensures it has placed one-third of the gas estimated to be produced in Vaca Muerta over the next two decades.
Francos also stated that part of the revenue going to the state oil company's coffers will be used to finance the LNG mega project plant in the province of Río Negro.
Horacio Marín, president and CEO of YPF, aims for the Liquefied Natural Gas projects to be his major legacy at the company. This legacy was jeopardized by uncertainties around Malaysian oil company Petronas, the original partner, considering withdrawing from the mega project. This new agreement brings certainty and relief to markets that closely followed the back-and-forth between YPF and Petronas.
Although an MOU does not represent a binding investment obligation, symbolically it is a very important development as it confirms the interest of a major company like Shell in Argentine LNG and clears up doubts about the project's feasibility after the rumors of Petronas's potential exit.
