LNG

Golar LNG Ltd shares surged over the weekend as the company entered a definitive agreements with Pan American Energy (PAE) for a 20-year deployment of one of its floating LNG production units in Argentina to tap the vast resources of the Vaca Muerta Shale.

The CERAWeek energy event in Houston is entering day four with an executive conference program on March 9 covering issues such as “Balancing Economic Growth and Reducing Emissions in Emerging Asia” and a discussion on the Latin American power industry after delegates heard on day three of half a dozen new projects including LNG production in Bahrain and Argentina.

Argentine state energy company Yacimientos Petroliferos Fiscales (YPF), which has various LNG development and shale gas and oil projects, gave an overview in its latest earnings on the partial recovery from the pandemic of the South American energy market.

TotalEnergies has approved the final investment decision for the Fénix gas development offshore LNG importer Argentina in partnership with Germany’s main oil and gas company Wintershall Dea.

Exmar, the Belgian shipping line with a fleet of more than 40 vessels, posted its best first-half results of recent year and gave an update on the “Tango FLNG” production barge “force majeure” ongoing since June as well as the latest events relating to its financial position as a going concern.

Exmar, the Belgian shipping company with more than 40 vessels in its fleet now mostly focused mainly on the liquefied petroleum gas business, said the its “Tango FLNG” vessel chartered to Argentina was set to export its third cargo as the company’s finances also improved.

The South American nation of Chile has imported 2.23 million tonnes of LNG during the first 10 months of the year, down 5.7 percent on the same period of 2018 as pipeline gas supplies from Argentina have provided competition.

July 19 (LNGJ) - McDermott International of the US said it was awarded a contract by Argentine energy company YPF to provide pre-front-end engineering and design services for an LNG liquefaction facility with 5 million tonnes per annum of output and with potential expansion to 10 MTPA in the Vaca Muerta Shale Basin in northwest Argentina.

   “The scope of work is a continuation of a previous conceptual study developed for the YPF LNG Export Facility in Argentina under a contract in 2018,” said McDermott.

   The engineering firm said its London office would provide engineering services while the Houston office would perform project management and cost estimations.

“The award of this Pre-FEED project is a testimony of McDermott's technical expertise in LNG and our successful partnership with YPF over the years,” said Mark Coscio, McDermott's Senior Vice President for North, Central and South America.

A US government report outlines a rise in Argentina’s domestic natural gas production noted over the past three years, largely because of increasing production from the Neuquén Basin’s Vaca Muerta Shale and tight-gas play, while the nation has also started LNG exports.

“As production has grown, Argentina has resumed exporting natural gas by pipeline to neighboring Chile and Brazil and has started exporting liquefied natural gas,” said the report from the US Energy Information Administration.

Production from Vaca Muerta Shale surpassed 1.0 billion cubic feet per day (Bcf/d) in December 2018 and Argentina’s first LNG export cargo was shipped on June 6 from the offshore Tango floating liquefaction unit, according to the report.

“The growth in Argentina’s shale and tight gas production has partially offset declines in its natural gas production from mature fields,” said the EIA.

However, output from Vaca Muerta now accounts for about 23 percent of Argentina’s total gross natural gas production.

“The Vaca Muerta shale formation has technically recoverable resources of 308 trillion cubic feet of natural gas and 16 billion barrels of oil and condensate within 8.6 million acres, and it is geologically comparable to the Eagle Ford shale play in southern Texas,” stated the EIA.

“Only 4 percent of Vaca Muerta’s acreage has entered the development phase so far,” the report added.

“Argentina’s domestic natural gas production exceeds consumption during warmer months, from October through April, though production is insufficient to meet demand during colder months, May through September, which requires Argentina to import natural gas by both pipeline and as LNG,” explained the EIA.

“Because Argentina doesn’t have geologically suitable formations to serve as large-scale natural gas storage facilities, natural gas producers have to shut in surplus production to accommodate seasonal consumption patterns,” said the report.

“Argentina is conducting feasibility studies to identify potential natural gas storage sites,” it added.

From 1990 through 2007, Argentina was a net exporter of natural gas. Since then, Argentina has been importing more natural gas both by pipeline (mainly from Bolivia) and as LNG.

Argentina imports LNG using a floating storage and regasification vessel (FSRU) moored at the Escobar port near Buenos Aires.

In the last two years, with the growth in domestic production, Argentina has been importing LNG only during cooler months, March through October.

“Argentina will likely continue importing LNG during cooler months until additional pipeline infrastructure is built to deliver growing shale production to major demand centers,” said the US report.

“Argentina’s seasonal demand patterns, the opposite of countries in the Northern Hemisphere, allows Argentina to export LNG during months when major consuming countries in Asia are importing more LNG,” it added.

Natural gas from Vaca Muerta is transported by an existing pipeline network to the port of Bahía Blanca, where it is liquefied at Tango FLNG, a floating production barge chartered from Belgian shipping company Exmar.

“These pipelines were previously used to transport imported LNG from an FSRU moored offshore at Bahía Blanca,” said the EIA.

“Tango FLNG has an LNG production capacity of 500,000 metric tons (0.07 Bcf/d) and is expected to produce up to eight LNG-export cargoes per year,” it added.

“Future growth in LNG exports will require additional investments in onshore liquefaction facilities and pipeline infrastructure or the use of additional floating LNG-production vessels,” stated the US report.

Argentine oil and gas producer, Yacimientos Petroleiferos Fiscales (YPF), has sold overseas bonds for the first time in more than a year amid a slow return of investor confidence as the company starts small-scale LNG exports and the nation’s huge Vaca Muerta shale basin continues to be developed.

YPF issued $500 million of 10-year, dollar-denominated notes to yield 8.75 percent. The sale on June 24 was managed by the US Citigroup, the UK’s HSBC Holdings and Itau Unibanco Holdings SA of Brazil.

Bankers said that proceeds from the sale would go towards working capital and refinancing existing debt.

State-owned YPF is traditionally among the country’s biggest corporate borrowers and it hadn’t issued bonds recently in international markets as an economic slowdown and a currency crisis affected investor confidence.

YPF is the largest investor in the Vaca Muerta shale basin of onshore oil and gas reserves in the northwest Argentine province of Neuquen.

Covering an area the size of a small European country, it has become one of the world’s leading shale basins and has attracted international companies such as US majors ExxonMobil and Chevron Corp., Qatar Petroleum, French major Total and Equinor of Norway.

Argentina also loaded its first shipment of LNG on June 3 for export at the “Tango FLNG” facility deployed at the Argentine port of Bahia Blanca.

YPF said the shipment included 30,000 cubic metres of natural gas from the Vaca Muerta shale.

An LNG carrier, the Malta-registered and Japanese-built “Fuji LNG”, lifted the cargo at Bahia Blanca after arriving on June 2 and then proceeded to Cheniere Energy’s Sabine Pass plant in Louisiana, arriving on June 24, according to shipping data.

The “Tango FLNG” plant is chartered under a 10-year agreement from Belgian shipping company Exmar.

The vessel is the former floating liquefaction unit, “Caribbean FLNG”, constructed for a cancelled venture in the South American state of Colombia and renamed before being sent to Argentina.

YPF did not at first specify the destination of the shipment, though said it was being helped by the marketing arm of US exporter Cheniere.

Argentina’s medium-term aim in the LNG sector is to halt its own LNG imports, which will number at least nine large-scale cargoes or more for the Southern Hemisphere winter, and to become an exporter.

Growing natural gas production from the Vaca Muerta shale will eventually meet all of the nation’s energy requirements and leave a surplus for export.

However, production costs for shale will have to be reduced to make exports economic and huge investment is needed in infrastructure to handle large-scale gas volumes and onshore liquefaction, though the floating LNG project is viewed as a good introduction to the export market for YPF.

The “Tango FLNG” plant will produce up to eight cargoes per annum from the Vaca Muerta supplies.

The shale-gas production has also enabled the resumption of pipeline supplies to neighbouring Chile.