Can Argentina Become the Next LNG Powerhouse?

Vaca Muerta’s gas surge and floating LNG plans may elevate Argentina into the ranks of top global exporters

16 Jun 2025

Argentina is accelerating plans to become a global supplier of liquefied natural gas as shale gas output from the Vaca Muerta formation grows faster than oil, and state-backed infrastructure moves closer to approval.

Natural gas production in Vaca Muerta rose to 2.1bn cubic feet per day in the first quarter of 2025, up 16 per cent compared with a year earlier. While oil output also increased, investors are shifting attention to gas, which can be more quickly exported using floating LNG vessels.

The centrepiece of the strategy is Argentina LNG, a multi-phase export project led by state-run YPF and Italy’s Eni. On June 6, the partners signed a framework agreement to prepare for a final investment decision (FID) on the first phase of the project, which includes two floating LNG units with combined capacity of about 12mn tonnes per year.

YPF said the goal is to reach FID by the end of 2025, after which construction could begin. The project would be based offshore from the province of Río Negro, avoiding onshore infrastructure delays and enabling faster access to buyers in Europe and Asia.

The long-term aim is to expand capacity to 30mn tonnes annually by 2030. This will depend on global market conditions, financing, and continued growth in gas supply from Vaca Muerta, which holds one of the world’s largest shale reserves.

“This is a game-changing moment,” said an executive involved in the project. “With global LNG demand rising and oil-pipeline congestion at home, gas offers the faster and more scalable route to export dollars.”

Challenges remain. Investors remain cautious amid Argentina’s inflationary pressures, currency controls, and ongoing policy uncertainty. Domestic price regulations could also limit margins for exporters.

However, modular floating LNG technology and rising domestic production have shifted sentiment toward gas. Companies are already adjusting upstream drilling and port infrastructure to match Argentina LNG’s phased timeline.

The move also marks a regional shift. If successful, Argentina’s pivot could position South America as a significant LNG player by the next decade, with Vaca Muerta at the centre of the transition.