Sergio Massa will advance with the LNG law to unlock millionaire investments

From the Ministry of Economy they said that this week Massa will seek to dialogue with Pablo Gonzalezpresident of YPF, to outline the fine print of the bill, and send it to Congress. After two rulings in international courts, YPF has practically cleared the judicial horizon and one of its objectives will be to finish sealing the agreement with the Petronas oil company of Malaysia.

On paper, the numbers of the YPF-Petronas agreement are auspicious. Both companies signed a reservation with the authorities of the port of Bahía Blanca for the future location of what could be the first LNG production plant from the country. It will seek to produce 25 million tons of LNG when it reaches its peak, which is equivalent to all the consumption of a country like France. The project also includes investment in gas production in a Vaca Muerta block and the infrastructure to three pipelines.

The project could be decisive for the Argentine economy, due to the increase in exports outside of Latin America. In addition, the context is favorable from geopolitics, after the rise in energy prices due to Russia’s invasion of Ukraine, which led to Russia ceasing to be a reliable supplier for the rest of the world. From YPF they estimate that between plants and gas pipelines the investments could climb to US$30,000 million.

However, outside of the papers the situation is quite different. The Government agrees with the business sector on the need to guarantee Fiscal and tax stability for decades, and clear rules of the game in terms of uninterrupted supply of export contracts. But there are obstacles for which the agreement with Petronas could be far from materializing, related to the company’s requests for free access to foreign currency, according to official sources. The same situation occurred with the green hydrogen bill.

Both draft energy bills have already been announced on several occasions, but they do not reach Congress, despite the fact that there are not too many expectations there either due to the lack of consensus between the ruling party and the opposition. In December, Massa was with Paolo Rocca, owner of Techint, at the closing of the Propymes meeting, and assured that the LNG law was going to be dealt with in extraordinary sessions. Then, in March, he promised it again before dozens of New York investors during the 30th anniversary of YPF’s listing on Wall Street.

However, without a regulatory framework, none of the investment in dance will materialize. In addition to the YPF-Petronas project, there are also Argentine businessmen interested. On the one hand, Marcelo Mindlin from Pampa Energy it had planned to announce in March an LNG project to build a liquefaction plant in Bahía Blanca, in an alliance between TGS and Excelerate. Announcement that was never made. In the summer, during the expansion of the Ensenada Barragán thermal power plant in which Ámbito participated, he had said in dialogue with the media: “The entire sector hopes that a law will come out that will give a framework to investments so large that they are for 30 years. We hope that it will be sent to Congress and approved with all the support, it is essential, because being a new activity, otherwise it is very difficult”.

Along the same lines, businessman Marcos Bulgheroni, CEO of Pan American Energy (PAE), has been insisting for a year on the need for a regulatory framework to advance in the export of LNG. PAE is also interested in being part of the construction of a liquefaction plant and the necessary infrastructure, and for that it proposes as an alternative the creation of a consortium of companies given the magnitude of the investments, and since the big players in the market energy are Argentine companies.