UK supermajor Shell has announced it is pulling out of the initial phase of the multibillion-dollar Argentina LNG project, a year after announcing its participation in the project.
Shell and Argentina’s state-controlled energy company YPF last December signed an agreement to develop the initial phase of the $50 billion flagship liquefied natural gas project. The pair were set to launch a front-end engineering and design (FEED) process for the project in December, Upstream previously reported.
However, the UK company has announced that it would not be proceeding.
“Shell has decided not to move forward with the initial phase of the Argentina LNG project,”
Shell said in a statement sent to Upstream on Friday, adding that it had “participated in pre-FEED only”.
“We continue to see Argentina as a potentially attractive growth market for LNG export. Therefore, Shell is continuing to explore expansion options with YPF for Argentina LNG,” the statement added.
Almost 12 months ago to the day, Shell had hailed Argentina LNG as being “aligned with [the company’s] plans to continue growing its LNG business”.
Shell on Thursday told Reuters that it had stepped away from a phase of the Argentina LNG project, citing a significant change in the project scope.
YPF chief executive Horacio Marin told the newswire that the Shell-related phase of Argentina LNG had now halved from 12 million tonnes per annum to 6 million tpa, explaining that a project phase involving Italy’s Eni and Abu Dhabi National Oil Company (Adnoc) investment arm, XRG, was now the priority.
Marin added that the company will seek a partner to replace Shell, adding that he now expects a potential final investment decision on the LNG project in mid-2026. This aligns with a 2026 timeline for FID that Marin previously discussed, which was corroborated by partner Eni.
Exports from the project phase involving Eni and XRG will likely start in 2030 or 2031, or four years from project sanction.
Eni and YPF last month signed a non-binding agreement with XRG, regarding its potential involvement in the Argentina LNG project, which will exploit resources from the Vaca Muerta gas shale formation.
Argentina LNG is one of two LNG projects being advanced in the country, the other being Southern Energy.
