Petronas and YPF join forces to set up an LNG plant is Sierra Grande

Petronas, Malaysia’s state-owned oil company, together with Argentine oil firm YPF, announced a collaborative investment exceeding $30 billion to build a liquefied natural gas (LNG) facility in Sierra Grande, located in the Patagonian province of Rio Negro, Argentina. Initially eyed for Buenos Aires’ Bahia Blanca, the site selection shifted to Sierra Grande following detailed evaluations which highlighted several logistical and economic benefits.

Key advantages of the Sierra Grande location include reduced pipeline length necessary to transport gas from the Vaca Muerta shale formation and deeper sea depths that eliminate the need for extensive dredging—factors that streamline operations and lower costs. The selection was further supported by an Arthur D. Little report citing Rio Negro’s suitability for a deep-water port capable of handling large "supertanker" ships, further enhancing the project’s economic feasibility.

The partnership between YPF and Petronas is longstanding, originating in 2014 with their cooperation on the La Amarga Chica Unconventional Block in Vaca Muerta. This project is part of a larger $10 billion investment plan by YPF aimed at expanding its energy projects over the coming decade.

Beyond construction, the strategic goal for the Sierra Grande facility includes transforming it into an export hub for the Argentine natural gas industry. To this end, YPF and Petronas are engaging other key sector players like PAE, Total Austral, Tecpetrol, Pampa Energía, CGC, and Wintershall Dea, and have begun discussions with potential international buyers.

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The new LNG plant is expected to significantly impact the local economy by creating numerous jobs and revitalizing the Punta Colorada port. This venture not only promises to boost local industry but also aims to position Argentina more prominently in the global LNG market.