YPF moves forward with up to US$16 billion loan for Argentina LNG

YPF, Eni and XRG are advancing in structuring financing of between US$14 billion and US$16 billion for Argentina LNG, the project aimed at exporting gas from Vaca Muerta. The partners aim to complete the deal before year-end, together with the final investment decision.

JP Morgan and Santander are advising on the financial structuring, while talks continue with international banks and export credit agencies. The participation of institutions such as Citi, Deutsche Bank and SACE, the Italian agency linked to Eni's presence in the project, is also being considered.

The loan will be taken on by Midco ARLNG I, a company created to hold the midstream infrastructure: pipelines, processing and fractionation plants, port facilities and two floating liquefaction units. Gas production will be kept separate under Upco ARLNG I, where YPF will hold 36% and Eni and XRG 32% each.

The deal is being structured under a project finance scheme, with repayment based on the project's future revenues and long-term export contracts with investment-grade international buyers. The final composition of lenders will depend, among other factors, on upcoming tenders and the origin of suppliers.

Argentina LNG envisions total estimated investment of US$51,000 million over its lifetime. Through 2031, when the two floating units are expected to come online, disbursements would reach US$29,000 million, with US$24,000 million earmarked for infrastructure and US$5,000 million for block development and drilling.

The units will have a combined capacity of 12 million tonnes of LNG per year. The gas will be produced in Neuquén, transported to Río Negro and liquefied off the coast of the San Matías Gulf. According to YPF estimates, the project could generate exports of close to US$10 billion per year over two decades.