The overseas unit of Abu Dhabi’s biggest oil company is in talks to invest in a liquefied natural gas project Argentina’s YPF SA is developing as it pushes to start exporting the fuel, according to people familiar with the matter.
XRG is eyeing a stake in the project as it considers expanding its LNG portfolio in Latin America, the US and Asia, according to one of the people, who asked not to be identified because the matter isn’t public.
State-run YPF is developing the floating terminal as Argentina tries to tap global LNG demand and accelerate output of vast natural gas reserves in the Vaca Muerta shale basin. The project, which requires construction of several liquefaction vessels, is designed to eventually produce 28 million tons of LNG annually. Shell Plc and Eni SpA are working with YPF on the project, but final investment decisions haven’t been made.
XRG’s talks with YPF are preliminary, and the company may ultimately decide not to pursue an investment, according to the people. XRG declined to comment.
On Monday, YPF’s depositary receipts traded in New York jumped as much as 38% after libertarian President Javier Milei’s party prevailed in legislative elections. The midterms were seen as a pivotal moment for foreign investors looking for opportunities in Argentina, providing a clear sign voters would continue backing Milei’s push to deregulate the economy.
XRG is the international arm of Abu Dhabi National Oil Co., backed by Abu Dhabi’s oil wealth.
It has already acquired a stake in NextDecade Corp.’s Rio Grande LNG project being built in South Texas, and is in the process of taking over Germany’s Covestro AG as it bets on lasting demand for gas and chemicals in the energy transition. It’s also bought gas assets in Africa and Central Asia.
But the company also had a setback last month when it dropped a planned $19 billion acquisition of Australia’s Santos Ltd. that would’ve catapulted it into the top ranks of LNG producers.
The United Arab Emirates is funneling its oil wealth into state companies that are expanding globally, buying assets in energy, technology, tourism and consumer industries. The government is leveraging ties with the US and with countries that have regional or religious affinity to help execute deals.
Argentina’s LNG push includes the YPF-led plans plus another smaller project involving a consortium of gas producers and FLNG provider Golar LNG Ltd.
YPF Chief Executive Officer Horacio Marin met Adnoc CEO Sultan Al Jaber in Houston in March, and Marin is scheduled to attend the Middle East’s largest energy gathering in Abu Dhabi next week.
Adnoc has previously shown interest in South America, when it weighed a bid for Brazilian chemical maker Braskem SA, but it eventually walked away.
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