(Bloomberg) – Argentine state-run energy powerhouse YPF SA is set to join a significant joint venture spearheaded by rival shale producer Pan American Energy Group SL and notable liquefied natural gas (LNG) shipper Golar LNG Ltd., as confirmed by Executive Chairman Horacio Marin.
The strategic merger of what have previously been two distinct LNG initiatives—one directed by YPF and the other collaboratively led by Pan American and Golar—aims to enhance production and export capacities within Argentina’s Vaca Muerta formation, recognized as the second-largest reservoir of shale gas globally. YPF and Pan American stand out as Argentina’s foremost oil and gas producers, with Pan American being partially owned (50%) by British oil giant BP Plc.
Golar’s stock on the New York exchange experienced a remarkable upswing, climbing as much as 9.9% following the announcement.
Argentina’s ambitions for LNG exports place the nation in direct competition with and against significant expansions from the United States and Qatar, the foremost natural gas exporters in the world. The demand for LNG is notably escalating in Europe, where countries are diligently reducing reliance on gas supplies piped in from Russia, as well as in Southeast Asia, where emerging markets are actively seeking to de-carbonize their energy sources.
Marin took to LinkedIn to express his enthusiasm about YPF joining forces with the Pan American-Golar venture. In a show of optimism, Pan American CEO Marcos Bulgheroni responded, expressing eagerness for their collaborative efforts. This interaction follows recent declarations from Golar executives who indicated they were open to incorporating additional participants into their project.
Meanwhile, uncertainty looms over the future involvement of Petronas, which has been a steadfast supporter of YPF’s LNG initiatives since their inception over two years ago. Marin has recently raised questions regarding the Malaysian company’s ongoing participation in the project. A spokesperson for Petronas in Buenos Aires did not immediately respond to inquiries for clarification.
Argentina has been actively exploring options to transport its increasing production from the Vaca Muerta formation, initially looking towards regional neighbors like Chile and subsequently Brazil. While exporting LNG represents a crucial next phase, undertaking such projects demands substantial investment in infrastructure amidst a landscape riddled with significant financial challenges and investment roadblocks.
Libertarian President Javier Milei has been in office for just over a year, dedicated to reforming the business climate in the country. In pursuit of this goal, he implemented a program offering long-term tax and foreign-exchange incentives, gaining approval from Congress, to which various energy and mining corporations have begun to apply. Pan American-Golar has submitted their LNG initiative for consideration under this program as of November 22, as noted by Economy Minister Luis Caputo.
What are the key benefits YPF expects to gain from merging its LNG project with Pan American Energy and Golar LNG in terms of production capacity and market positioning?
**Interview with Horacio Marin, Executive Chairman of YPF SA**
**Host:** Good morning, and welcome to our special segment on Argentina’s burgeoning energy landscape. Today, we have the privilege of speaking with Horacio Marin, Executive Chairman of YPF SA, following the recent announcement that YPF will merge its liquefied natural gas (LNG) project with the joint venture initiated by Pan American Energy Group and Golar LNG. Thank you for joining us, Horacio.
**Horacio Marin:** Thank you for having me. It’s a pleasure to be here.
**Host:** Let’s dive right in. This merger with Pan American Energy and Golar LNG marks a significant strategic shift for YPF. Can you explain the motivations behind this decision?
**Horacio Marin:** Absolutely. Our goal is to enhance production and export capacities within Argentina’s Vaca Muerta formation, which is crucial as it’s one of the largest shale gas reserves globally. By merging our initiatives, we can streamline efforts, reduce costs, and ultimately boost our LNG output to meet increasing global demands.
**Host:** Given that Golar’s stock experienced a noticeable increase after the announcement—up nearly 10%—what impact do you anticipate this venture will have on investor perception of YPF and the wider Argentine energy sector?
**Horacio Marin:** The positive market reaction is encouraging and reflects confidence in our combined capabilities. This merger not only amplifies our competitive position but also showcases the potential in Argentina’s energy market to investors. We believe this partnership can attract more investments, particularly as global demand for LNG surges, especially in Europe and Southeast Asia.
**Host:** As you mentioned, global demand for LNG is growing, particularly as Europe reduces its reliance on Russian gas supplies. How does YPF plan to position itself against major LNG exporters like the United States and Qatar?
**Horacio Marin:** We understand the strong competition from these markets, and that’s why this joint venture is critical. By consolidating our resources and expertise, we aim to increase our efficiency and output, enabling us to offer competitive pricing and reliable supply to our international partners. Our natural resources, particularly in Vaca Muerta, position us well to play a significant role in the global LNG market.
**Host:** Lastly, what do you see as the biggest challenges ahead for this joint venture and Argentina’s LNG ambitions?
**Horacio Marin:** While the merging of our operations offers significant opportunities, challenges remain, including infrastructure development, regulatory hurdles, and ensuring we maintain sustainable practices. However, we are committed to navigating these challenges and believe that collaboration will be key to overcoming them.
**Host:** Thank you, Horacio, for sharing your insights on this groundbreaking development in Argentina’s energy sector. We look forward to seeing how this venture unfolds.
**Horacio Marin:** Thank you for having me. Exciting times lie ahead for all of us.
