Belgium-based Exmar has reached a settlement agreement with Argentina state oil and gas firm YPF SA over the Tango floating liquefied natural gas (LNG) vessel docked at the Bahía Blanca port.
YPF issued a force majeure notice in June claiming it couldn’t meet the terms of its charter agreement for the Tango vessel because of Covid-19.
YPF is to pay Exmar $150 million, according to the Belgian company. Exmar said the vessel is now ready for other projects, thus ending Argentina’s brief one-year foray into sending out LNG for export.
In June 2019, Argentina started shipping out small-scale LNG exports, the first of their kind in the country. The LNG was produced on Exmar’s barge at Bahía Blanca using natural gas piped in from the vast Vaca Muerta shale formation in Western Argentina. The vessel has a production capacity of 500,000 metric tons, or about 0.07 Bcf/d.
Driven by booming natural gas production, Argentina also last year awarded a “sizeable contract” to McDermott International Inc. to provide preliminary front end and engineering design services for a 5-10 million metric ton/year (mmty) LNG liquefaction facility to serve producers developing the Vaca Muerta.
At the time, Wood Mackenzie expected Argentina LNG volumes to reach 6 mmty in 2024, and then grow to 10 mmty by 2030. However, a change in government, an ongoing economic crisis and the coronavirus pandemic have brought drilling activity in Vaca Muerta drastically down.
To try to restart investment in the area, Argentina President Alberto Fernández last week unveiled a natural gas stimulus scheme. The four-year tender plan offers producers higher prices and is aimed at turning around falling production.
Vaca Muerta has technically recoverable resources of 308 Tcf of natural gas within 8.6 million acres, according to the U.S. Energy Information Agency (EIA). It is geologically comparable to the Eagle Ford Shale in South Texas, and only 4% of Vaca Muerta’s acreage has entered the development phase so far.