Argentinas Southern Energy signs record 8-year LNG agreement with Germanys SEFE

Argentina’s Southern Energy, the venture formed by PAE, YPF, Pampa Energía, Harbour Energy and Golar LNG, has sealed a strategic agreement with German state-owned energy company, Securing Energy for Europe (SEFE), for the sale of 2 million metric tonnes of LNG per year for eight years beginning in late 2027.  It is the largest liquefied natural gas export deal ever signed by Argentina, both in volume and duration, and marks a milestone in the country’s effort to position itself as a future global gas supplier. The understanding, signed as a heads of agreement — a kind of nonbinding preliminary agreement — specifies that deliveries will begin once the Hilli Episeyo comes online. It is the first of two liquefaction vessels Southern Energy will deploy in the San Matías Gulf in Río Negro province. The vessel can produce 2.45 million tonnes of LNG per year, more than 80% of which SEFE has already secured. Considering the combined capacity of the two floating units, the committed volume represents more than 30% of the whole project. While the final value will depend on international price trends, projected exports could exceed US$7 billion over the life of the contract. Argentina’s growing global energy role For Argentina, the deal offers a steady source of foreign currency and a key step toward expanding its role in the global LNG market by leveraging the potential of Vaca Muerta. The signing was led by Rodolfo Freyre, chairman of Southern Energy, and Frédéric Barnaud, chief commercial officer of SEFE. Also present were Marcos Bulgheroni (PAE), Santiago Martínez Tanoira (YPF), Horacio Turri (Pampa Energía), Martín Rueda (Harbour Energy) and Federico Petersen (Golar LNG). “It will be the first large-scale LNG sale from Argentina and marks a milestone for the future development of Vaca Muerta’s natural gas reserves,” Freyre said. “We are proud to take this first step with an international player like SEFE.” From Germany, Barnaud underscored the strategic importance for Europe: “This first LNG agreement between SEFE and a South American supplier contributes to the geographic diversification of our portfolio and strengthens Europe’s energy security. We are pleased to accompany Argentina on its path to becoming a global LNG exporter.” He also noted that the agreement will allow SEFE to continue its operational experience with the Hilli Episeyo, which will be moved from Cameroon to Patagonia. Diversifying Europe’s energy markets SEFE is one of the European Union’s leading energy companies. With annual gas and energy sales of 200 TWh, it supplies 50,000 customers — from small and mid-sized firms to major multinationals — and operates across the entire value chain, including production, marketing, transport and storage. Owned by the German government, it is a key player in Europe’s energy security. It also invests in the energy transition and hydrogen. The company employs about 2,000 people worldwide. Southern Energy, created to position Argentina as a new player in the global LNG market, has already confirmed more than US$15 billion in investment to develop the project over 20 years. Expected exports between 2027 and 2035 will exceed US$20 billion, consolidating Argentine gas as a long-term strategic resource. The project will also generate 1,900 direct and indirect jobs, mostly local, during the construction phase and sustain a high level of domestic supplier participation during operations. Building the pipeline A few days ago, the MV Billion Star arrived at the port of San Antonio Este from Shanghai, China, carrying 10,000 tonnes of steel pipes for construction of the pipeline for the Argentina floating LNG project. From a logistical standpoint, the arrival of the MV Billion Star at the Río Negro port strengthens integration among the energy, port and metalworking sectors, with effects across the local value chain. The movement of materials, the hiring of stevedoring and transport services, and the involvement of specialized workers will drive employment and economic activity in the coming months. Each stage will reinforce the infrastructure needed to transport, process and export gas from Neuquén, turning the port of San Antonio Este into a key node in the national energy network. Originally published on Ámbito Energy Report