(The Energy Circle, May 5) Argentina is taking a decisive step towards positioning itself as a key player in the global liquefied natural gas (LNG) market. In a landmark announcement for the national energy sector, Southern Energy — a consortium formed by Pan American Energy (PAE), YPF, Pampa Energía, Harbour Energy, and Golar LNG — confirmed the expansion of its LNG export project with the addition of a second floating liquefaction vessel, the MKII, currently under construction in China and scheduled to arrive in 2028.
This development marks a critical phase in the broader Argentina LNG project, which will bring the country’s LNG export capacity to 27 million cubic metres per day (m3/d) by the end of the decade — roughly 18% of Argentina’s current gas output. This strategic move transforms the prolific Vaca Muerta formation from a domestic powerhouse into a future hub of global gas supply.
The project includes the deployment of two floating LNG (FLNG) units in the Gulf of San Matías, located between Sierra Grande and San Antonio Oeste in the province of Río Negro. The same location will also host a planned oil export terminal, establishing the area as a critical node in Argentina’s energy infrastructure.
The first vessel, Hilli Episeyo, is currently in operation off the coast of Cameroon and will be relocated to Argentina in early 2027. With a production capacity of 2.45 million tonnes per annum (MTPA) — equivalent to 11.5 million m3/d — it represents a proven model of offshore LNG operations.
The second vessel, MKII, is being built at a Chinese shipyard and will enter commercial service by late 2028. It will have a larger output, with a production capacity of 3.5 MTPA, or around 16 million m3/d. Combined, these two vessels will enable the export of 6 MTPA of LNG from Argentina — a substantial addition to global supply at a time of growing demand and shifting geopolitical energy dynamics.
The total investment in the project, which has now reached final investment decision (FID), is expected to surpass $7 billion over a 20-year operational horizon. The project has already secured authorisation from Argentina’s Energy Secretariat for 30 years of free LNG exports and is part of the recently approved Large Investment Incentive Scheme (RIGI), providing fiscal and regulatory certainty to investors.
Supporting infrastructure is now in planning, most notably a dedicated gas pipeline from Vaca Muerta to the Gulf of San Matías to ensure year-round supply to the FLNG units. This will complement the Perito Moreno Pipeline (formerly known as the Néstor Kirchner Pipeline), completed in 2023 with a $2.7 billion investment.
In parallel, YPF is leading plans to build four additional LNG vessels in partnership with Eni and Shell, potentially increasing Argentina’s total export capacity to 30 MTPA by 2030 — equivalent to 141 million m3/d. This would double Argentina’s current gas production and generate up to $15 billion in annual export revenues.
The decision to pursue floating LNG infrastructure instead of onshore plants reflects a preference for scalability, flexibility, and financial efficiency. While an onshore liquefaction plant requires a capital outlay of at least $3 billion, FLNG vessels offer lower upfront costs, shorter lead times, and reduced risk profiles — making them more attractive for both operators and financiers.
“Floating LNG offers greater certainty in delivery timelines due to turnkey contracts, which is crucial for offtakers,” YPF sources noted. “What was once uncertain — onshore or offshore — is now clearly skewed towards FLNG due to its cost competitiveness and modularity.”
Beyond export potential, the Argentina LNG project marks the country’s formal entry into the ranks of global LNG suppliers — a field currently dominated by Qatar, Australia, the United States, Russia, and Malaysia. Vaca Muerta’s transformation from a domestic shale basin into a globally significant resource base is both a technical achievement and a strategic economic opportunity.
At a time when global energy markets are being reshaped by geopolitical instability and the energy transition, natural gas is increasingly seen as a bridge fuel in the path to decarbonisation. With abundant resources, improving infrastructure, and the backing of leading international partners, Argentina is uniquely positioned to meet this challenge head-on.
Southern Energy’s commitment — alongside partners YPF, PAE, and global LNG pioneer Golar LNG — sends a strong signal to international markets: Argentina is open for energy business. With the arrival of the Hilli Episeyo and MKII, and future LNG expansions on the horizon, Argentina is poised to become not just a reliable exporter, but a strategic supplier of cleaner energy for decades to come.
