State-owned YPF has poured cold water on the idea of constructing an onshore LNG facility near Argentina’s giant Vaca Muerta shale formation, Reuters reported on April 25.

In an interview with local media Diario Rio Negro, YPF’s CEO Horacio Marin stated that the company will utilise only floating LNG (FLNG) terminals, which will expedite the building process and enable the firm to get the super-chilled fuel to market sooner.

“The time frames are much faster than on a land-based plant, and they're all turnkey projects so you know exactly what they will cost,” Marin declared.

Developments at the vast Vaca Muerta shale formation are being watched closely. It holds the globe’s second biggest shale gas reserves and fourth largest shale oil reserves and is seen as a key pillar in Argentine President Javier Milei’s development plan.

Under current timelines, YPF and its partners in the Southern Energy Project are seeking to bring the country’s first liquefaction terminal online by 2027. The first FLNG will boast a capacity of 11.5mn cubic metres per day. Expansion plans would see a second FLNG brought online one year later.

YPF has taken a number of key steps forward in recent months in developing the Vaca Muerta formation. In December, YPF and Shell signed a 20-year memorandum of understanding (MoU), under which the two firms will collaborate attempting to export about 10mn tonnes per year (tpy) of LNG, equivalent to 40mn cubic metres per day of natural gas.

Once operational, the companies expect the project to bring in about $7bn annually from the two FLNG terminals located in Rio Negro province’s San Matias Gulf.

Additionally, YPF also agreed earlier in April to an MoU with Italian energy firm Eni, which will assist in developing upstream, transportation and liquefaction facilities for the FLNG vessels, which will each possess a production capacity of 5mn tpy.