Adnoc's XRG signs agreement with YPF to develop LNG project in Argentina

The project’s initial phase is expected to deliver 12 million tonnes per annum of LNG production capacity

XRG is rapidly expanding its global LNG presence. Chris Whiteoak / The National

XRG, Adnoc's international energy investment unit, signed an initial agreement with Argentina’s YPF and Italy’s Eni to develop an integrated liquefied natural gas project in the South American nation.

The non-binding framework agreement was signed at Abu Dhabi energy conference Adipec on Tuesday and is part of XRG's efforts to build a global gas portfolio and expand its footprint across the Americas.

The Argentina LNG project combines upstream gas production from the Vaca Muerta shale basin with offshore liquefaction using floating liquefied natural gas (FLNG) technology, XRG said.

The project’s initial phase is expected to deliver 12 million tonnes per annum (mtpa) of LNG production capacity through two 6 mtpa FLNG vessels.

“Argentina’s LNG potential is truly transformative,” said Mohamed Al Aryani, president of international gas at XRG.

The companies aim to “set new benchmarks for innovation, scale, and reliability in the international gas market”, he said.

Dr Sultan Al Jaber, Minister of Industry and Advanced Technology, managing director and group chief executive of Adnoc and executive chairman of XRG (centre) with Claudio Descalzi, chief executive of Eni (third from right) and and Horacio Marín, chief executive of YPF (third from left) at the signing. Photo: XRG

XRG was launched last year as an international lower-carbon energy and chemicals investment company, with an enterprise value exceeding $80 billion.

The company has been actively increasing its operations globally and plans to double its asset value over the next decade, capitalising on the energy transition, artificial intelligence and the rise of emerging economies.

On Monday, XRG signed a non-binding agreement to acquire a stake in Azerbaijan's Southern Gas Corridor (SGC) company. The investment supports XRG’s regional strategy in the Caspian and will support the delivery of gas resources from Azerbaijan to the European market, the company said.

In September, it also closed the acquisition of an 11.7 per cent stake in Phase 1 of the Rio Grande LNG project in Texas. The deal, initially announced last year, is XRG’s first natural gas investment in the US.

The investment is a strategic joint venture between XRG and Global Infrastructure Partners, which is part of global asset manager BlackRock.

Rio Grande LNG is one of the most ambitious LNG export infrastructure projects in the US, with about 48 million tonnes per annum of potential liquefaction capacity currently under construction or in development.

XRG has also made investments in Mozambique’s Rovuma Basin, Block-1 Turkmenistan, Arcius Energy in Egypt, Absheron in Azerbaijan.

Natural gas demand is set to rise by anywhere between about 1.5 per cent and 1.7 per cent annually between last year and 2030, the International Energy Agency said in a report last month.

According to the report, about 300 billion cubic metres (bcm) per year of LNG export capacity – a record – is set to be added by 2030, primarily supported by liquefaction capacity additions in the US and Qatar.

“This unprecedented worldwide expansion is expected to strengthen global supply security and ease market pressures following a period of tightness,” it said.