YPF, Eni Partner with ADNOC’s XRG on Vaca Muerta LNG Project

The venture will use floating liquefaction units in Rio Negro province and could generate $20 billion in annual exports, positioning Argentina as a global LNG supplier.

(Reuters) — Argentina's YPF and Italy's Eni have reached an agreement with the Abu Dhabi National Oil Company's XRG investment arm for it to join a liquefied natural gas project linked to Argentina's Vaca Muerta field, YPF said on Nov. 4.

In a statement released during the Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC), YPF CEO Horacio Marin said XRG's incorporation "strengthens a key initiative for the energy future of the country” and will allow Argentina to turn into a "world-class" exporter of LNG.

The project is seeking financing of at least $12.5 billion, a person close to YPF told Reuters. The companies are expected to sign a technical agreement within a month, that person added.

Eni and Argentine state-controlled oil company YPF signed a final engineering agreement in October to export gas from the Vaca Muerta formation, the world's second-largest unconventional natural gas reserve.

YPF is leading the project, which involves installing floating liquefaction units at a port in the Patagonian province of Rio Negro. Gas will arrive from Vaca Muerta, in the province of Neuquen, via a pipeline.

Argentina, which is seeking to increase its foreign exchange reserves, could earn around $20 billion annually in exports from the project.