Argentina's $20B LNG Expansion Moves Forward as Shell Bows Out, Partners Consolidate Strategy

Argentinian state-owned energy giant YPF Sociedad Anonima is charting an ambitious course for its liquefied natural gas ambitions, with expectations to finalize investment commitments for a major $20 billion LNG initiative by 2026. The project, conceived in partnership with Italy’s Eni and the Abu Dhabi investment arm ADNOC through its XRG division, targets production capacity of 12 million metric tons annually, according to industry reports.

Under the restructured arrangement, each of the three energy companies is positioned to hold roughly one-third ownership stake in the venture. The leadership at YPF has indicated this three-way collaboration represents the primary focus moving forward, with export operations potentially commencing between 2030 and 2031—contingent upon achieving the mid-2026 FID milestone. The company estimates a four-year development window following the final investment decision.

Shell’s Strategic Retreat and Project Recalibration

The path to this current configuration involved a significant pivot. Shell plc, the British petroleum multinational, has disengaged from an earlier phase of Argentina’s LNG expansion after signing a preliminary development agreement with YPF approximately one year ago. Shell’s withdrawal stems from substantial modifications to project parameters and scope, according to statements from YPF’s executive leadership.

The scope adjustments proved consequential: the initial capacity target was substantially reduced from 12 million metric tons per year to 6 million metric tons per year, representing a 50% decrease in planned output. These structural changes prompted Shell to reassess its involvement and ultimately exit the arrangement. YPF has committed to identifying alternative partners to fulfill Shell’s former role in this phase of development.

Project Timeline and Strategic Positioning

The LNG initiative now centers on the three-party partnership with Eni and ADNOC’s XRG, which the company views as the priority development track. Should the consortium secure FID approval by mid-2026 as targeted, the 12 million metric ton annual production facility could begin commercial shipments around 2030-2031.

This restructuring underscores the dynamic nature of large-scale energy infrastructure projects, where scale, partnership dynamics, and investment parameters continue to evolve as projects advance through development phases. YPF’s ability to maintain momentum on the core 12 mtpa facility while recalibrating other project elements demonstrates the company’s commitment to expanding Argentina’s LNG export capacity despite recent partner transitions.