TGS Halts Argentina LNG Plant as State-Run Project Seeks Backers

Natural gas transporter TGS SA is hitting the breaks on plans to build a small liquefaction plant to ship Argentina’s growing production of shale gas as state-run energy company YPF SA seeks industry-wide support for its large-scale project.

Author of the article:

Bloomberg News

Jonathan Gilbert

Published May 07, 2024 • 2 minute read

Storage tanks at a YPF SA facility in Plaza Huincul, Neuquen province, Argentina, on Tuesday, March 2, 2021. YPF, Argentina’s state-run oil company, needs to come up with more than $1 billion to spur drilling in Patagonia, where it’s leading development of the biggest shale patch outside the U.S. Photo by Anita Pouchard Serra /Bloomberg

(Bloomberg) — Natural gas transporter TGS SA is hitting the breaks on plans to build a small liquefaction plant to ship Argentina’s growing production of shale gas as state-run energy company YPF SA seeks industry-wide support for its large-scale project.

“We’ve put the LNG project on standby because there’s a new approach from YPF,” TGS Chief Financial Officer Alejandro Basso said on an earnings call Tuesday.

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TGS had been exploring designs for its own plant, a venture with Texas-based Excelerate Energy, and had even secured space for the facility at a port on Argentina’s Atlantic coast.

Now, Basso implied, the midstream gas company is instead eyeing a bigger project that YPF, Argentina’s biggest oil and gas producer, is developing with Malaysia’s Petronas.

Excelerate Energy declined to comment.

Argentina currently imports LNG but has lofty goals of becoming a net exporter of its shale gas.

YPF, which hasn’t yet begun construction on its planned terminal, aims to start exporting LNG in 2027 and ramp up volumes over the following years. Gas driller Pampa Energia SA, which is TGS’s biggest shareholder, recently said that it wants to participate in the YPF-Petronas project.

Other highlights from TGS earnings call:

Company received a 675% fee increase for its pipeline services in April, but hasn’t received word from the government on promised monthly inflation adjustments Separately, it expects the government to start work soon on a comprehensive review of natural gas fees and create a long-term pricing structure to put in place next yearEarnings for midstream service business are being boosted by Argentina’s growing shale gas production, and TGS expects expansions of its gas conditioning capacity to be ready in the second half of 2024State electricity wholesaler Cammesa has run up three months of debt with TGS, and Basso only expects to get paid once the government strikes an agreement with power generators that haven’t been receiving payment eitherCompany is preparing to go to the bond market to manage liabilities, but the timing depends on developments regarding the renewal of its pipeline-operating license

—With assistance from Ruth Liao.

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