Could Argentina become a major exporter of LNG?

Argentina’s massive shale gas reserves form the foundation for building export capacity through pipelines and LNG terminals — a transformation that could position the second-largest economy in South America as both a regional and global gas powerhouse.

The country holds the necessary resource base, notably the vast unconventional reserves in the Vaca Muerta shale formation in Neuquén Province. However, it must develop the infrastructure to transport gas from production zones to regional pipelines and planned export terminals. Additionally, Argentina must continue the market reforms initiated by business-friendly President Javier Milei to attract foreign investment and move past decades of economic instability and investor skepticism.

As it strives to become an LNG exporter, Argentina will face stiff competition from leading global LNG suppliers who enjoy lower production costs.

According to the latest report by Wood Mackenzie on Argentina’s gas and power markets, the country’s natural gas production could peak at 180 million cubic meters per day (Mmcd) by 2040 in a base-case scenario — potentially rising to 270 Mmcd if all planned LNG export projects are realized.

The unconventional gas fields of Vaca Muerta are central to this significant supply growth.

Javier Toro, Director of Research at Wood Mackenzie, stated: “With Bolivia’s exports expected to cease by the end of this decade, Argentina is strategically positioned to become the region’s leading supplier. At the same time, it has a real opportunity to establish itself as a reliable global LNG exporter.”

Vaca Muerta shale output surges

Oil and gas production from Vaca Muerta has seen a sharp rise in recent months, and Argentina is preparing for the next phase of this resource boom: exports.

Vaca Muerta — Spanish for “dead cow” — is often referred to as “Argentina’s Permian,” though geologically it more closely resembles the Eagle Ford formation in the U.S. The basin is estimated to contain 16 billion barrels of oil and 308 trillion cubic feet of recoverable natural gas, making it the second-largest shale gas reserve in the world and the fourth-largest for shale oil.

In Q1 2025, oil output from Vaca Muerta rose 26% year-on-year, while gas production increased 16%, according to Rystad Energy estimates.

Gas export prospects

Argentina is already connected by pipelines to Chile, Uruguay, and Bolivia. Recently, the flow through the Northern Pipeline was reversed, enabling gas exports to Brazil via Bolivia’s existing infrastructure.

Wood Mackenzie sees potential for Argentina to boost pipeline exports by extending the connection from Uruguaiana to Porto Alegre and linking it to Brazil’s integrated transportation system.

Argentina is also advancing several LNG export initiatives. State energy company YPF has signed agreements with Shell and Eni to co-develop the “Argentina LNG” project. This includes gas production from Vaca Muerta blocks, a 580-kilometer pipeline, and a processing and liquefaction facility in Sierra Grande, Río Negro Province, on the Atlantic coast.

The country has already reached a final investment decision (FID) for a floating liquefaction unit with a capacity of up to 2.5 million tonnes per year. It is also considering a second 3.5 million-tonne unit under the “Southern Energy” alliance, which includes Pan American Energy, Pampa, Harbour Energy, YPF, and Golar.

If all proposed projects are completed, Argentina could export 28 million tonnes of LNG per year by 2035, according to Wood Mackenzie.

Infrastructure and cost challenges

Despite its vast reserves and early commitments from global firms, Argentina’s LNG export future remains uncertain. The country needs multibillion-dollar investments in midstream infrastructure to move gas from fields to export terminals.

Wood Mackenzie notes: “To develop LNG projects, Argentina needs dedicated pipelines to liquefaction plants and significant upstream capacity.”

Interest in Vaca Muerta has surged since Javier Milei took office a year and a half ago, but he also halted state financing for infrastructure like pipelines, meaning companies must rely on private capital and incentives such as tax breaks under the new free-market model.

The government estimates that market liberalization efforts will raise energy sector investments to around $15 billion in 2025, up $2.5 billion from previous forecasts.

The recently passed RIGI law (Regime of Incentives for Major Investments) has further drawn investor attention, offering tax exemptions and regulatory facilitation for large-scale projects.

Global energy companies are once again exploring mergers and acquisitions (M\&A) opportunities in Argentina after years of market hesitation.

Still, cost competitiveness in the global LNG market remains a critical factor in determining Argentina’s actual export capacity.