XRG and Eni deepen Argentina LNG push

Abu Dhabi’s XRG and Italy’s Eni have agreed to buy minority stakes in three upstream blocks operated by YPF in Argentina’s Vaca Muerta basin, adding upstream weight to a liquefied natural gas project designed to turn the country’s shale gas reserves into large-scale export revenue.

The agreements give XRG and Eni 32 per cent each in the Meseta Buena Esperanza, Aguada Villanueva and Las Tacanas blocks, while YPF will retain 36 per cent. Completion remains subject to customary regulatory approvals. Financial terms were not disclosed.

The blocks are expected to supply gas to Argentina LNG, an integrated upstream-to-export project targeting 12 million tonnes per year of LNG capacity through floating liquefaction units. The transaction is significant because it moves XRG and Eni beyond project development into direct participation in upstream assets that will feed the planned export chain.

For Argentina, the deal strengthens a project central to President Javier Milei’s push to expand energy exports, attract foreign capital and build hard-currency earnings. Vaca Muerta, located mainly in Neuquén province, is one of the world’s largest unconventional oil and gas formations and has become the centrepiece of the country’s effort to shift from domestic gas producer to long-term LNG supplier.

The three blocks are linked to a wider plan covering gas production, processing, transport and liquefaction. The project has been structured around floating LNG technology, with gas from Vaca Muerta expected to be moved through dedicated infrastructure to export facilities on the Atlantic coast. Río Negro has been positioned as a key province for the downstream and maritime phase of the project.

XRG, the international investment arm of Abu Dhabi National Oil Company, was launched to build a global platform across gas, LNG, chemicals and low-carbon energy solutions. Its entry into the Vaca Muerta upstream segment fits a broader acquisition drive that includes interests in Rio Grande LNG in the United States, Mozambique’s Rovuma basin, Azerbaijan’s Absheron gas and condensate field and gas assets in Turkmenistan.

The company has set an ambition to build LNG capacity of 20 million to 25 million tonnes per year by 2035. Access to upstream gas resources in Argentina gives it a foothold in a basin that could supply Atlantic Basin LNG markets at a time when buyers are seeking diversified long-term sources beyond the United States, Qatar and Australia.

Eni’s participation also reflects its strategy of linking upstream gas positions to floating liquefaction expertise. The company has built experience in FLNG through projects in Mozambique and the Republic of Congo, and its role in Argentina LNG gives it exposure across the value chain from production to international LNG marketing.

YPF Chairman and Chief Executive Horacio Marín said the entry of Eni and XRG into the upstream segment strengthened the project’s value chain and helped move Argentina LNG towards global-scale development. XRG’s Mohamed Al Aryani described Vaca Muerta as one of the world’s most attractive gas resources, while Eni executive Guido Brusco said the move positioned the company from Argentine upstream through to LNG supply for international customers.

The latest agreements follow a binding joint development agreement signed by YPF, Eni and XRG in February to advance Argentina LNG. That accord set the work programme for front-end engineering design, commercial structuring, financing and technical studies, with a final investment decision targeted for the second half of 2026.

Argentina LNG has evolved through a series of agreements since 2024, including provincial frameworks in Río Negro and Neuquén and earlier YPF partnerships involving Shell and other energy groups. The project’s scale and complexity have made partner alignment, pipeline planning, export regulation and financing critical to its progress.

The economic stakes are high. Argentina has long struggled with shortages of dollars, volatile currency conditions and constrained access to international capital. LNG exports from Vaca Muerta would give the country a new source of recurring foreign exchange, alongside crude oil, agricultural exports and mining.

Energy analysts view Vaca Muerta as commercially attractive because of its resource depth, improving productivity and proximity to Atlantic shipping routes. But the project still faces execution risks, including the cost of pipelines, port infrastructure, floating liquefaction units, fiscal stability and the need for durable offtake contracts.