Vaca Muerta LNG Power
Eni and XRG Secure Stakes in Argentina's Vaca Muerta for Major LNG Export Project
Key Points
According to YPF CEO Horacio Marin, the three firms are evaluating the addition of a third floating LNG unit (FLNG) to further boost the capacity of the 12 mtpa phase of the integrated Argentina LNG project.
YPF will sell equity stakes in UPCO ARLNG I, the entity that will hold the three Vaca Muerta upstream blocks allocated to the LNG project.
Mohamed Al Aryani, President of XRG, said Argentina has the potential to play an increasingly important role in meeting the world’s growing natural gas demand, and projects such as ARGENTINA LNG will be important to unlocking that opportunity.
Eni’s Guido Brusco described Vaca Muerta as one of the world’s richest unconventional basins in terms of resources and said the partnership places Eni across the entire value chain—from Argentine upstream to LNG supply for international markets.
Italy's Eni and Abu Dhabi's XRG have each agreed to buy a 32% stake in three of Argentina's Vaca Muerta gas blocks, joining state energy company YPF in a plan to export liquefied natural gas to the world. Eni announced the deal on June 29, 2026, with YPF retaining a 36% share after regulatory approvals are complete. The transaction is a key step toward a 12-million-tonne-per-year LNG export project that could reshape Argentina's role in global energy markets.
The three blocks—Meseta Buena Esperanza, Aguada Villanueva, and Las Tacanas—sit in Vaca Muerta, the world's second-largest shale gas deposit. A final investment decision is expected in late 2026. The first floating LNG unit is targeted to start commercial operations around 2030, with a second unit following in 2031, according to Oil Price.
How the Three-Way Ownership Split Works
YPF will sell equity stakes in a new entity called UPCO ARLNG I. That company will hold the three Vaca Muerta upstream blocks tied to the LNG project. After the sale closes, Eni and XRG will each own 32%, while YPF keeps 36%. The deals are still waiting for regulatory sign-off in each relevant country, according to Yahoo Finance.
Eni's Chief Operating Officer Guido Brusco said Vaca Muerta is "one of the world's richest unconventional basins." He added that the deal "positions us across the entire value chain—from Argentine upstream to the supply of LNG to international customers." XRG President Mohamed Al Aryani said Argentina "has the potential to play an increasingly important role in meeting the world's growing demand for natural gas," according to The National.
Two Floating LNG Units—and Possibly a Third
The Argentina LNG project will use two floating LNG units, each with a capacity of 6 million tonnes per year. Together they reach the 12 MTPA target. The export hub is based in Sierra Grande, Río Negro, a coastal site chosen for its deep-water access. A 473-kilometer pipeline called San Matias, with a daily capacity of 27 million cubic meters, will carry gas from Vaca Muerta to the coast, according to PGJ Online.
YPF CEO Horacio Marín said the three partners are also evaluating a third floating LNG unit to push capacity even higher. Front-end engineering design, known as FEED, is already underway. Marín said the entry of Eni and XRG "allows us to move toward development on a global scale," according to World Oil.
Argentina's RIGI Tax Law Made This Deal Possible
In July 2024, President Javier Milei signed the RIGI law—short for Large Investment Incentive Regime. It gives big projects over $200 million a 30-year guarantee of legal and tax stability. The Argentina LNG project requires roughly $14 billion in capital. Without that kind of certainty, experts say, deals of this scale would be nearly impossible to finance in Argentina's historically volatile economy.
Over 35 large energy projects have applied under RIGI, signaling a major shift in foreign investor confidence, according to Industrial Info Resources. Wood Mackenzie analysts compare Vaca Muerta today to the Midland Basin in Texas around 2010—just before it became one of the world's most productive oil and gas regions. Breakeven costs for Vaca Muerta gas now sit below $2 per thousand cubic feet, making it globally competitive.
Environmental Fears Shadow the San Matías Gulf
Not everyone celebrates the deal. Environmental group FARN argues the project ignores the risks of methane leaks and the impact of offshore monobuoys on the San Matías Gulf—a critical breeding ground for the Southern Right Whale. Locals in Sierra Grande largely back the project, seeing it as an economic lifeline after the town's iron mining industry collapsed decades ago. But fishing and tourism communities fear the area could become a "sacrifice zone," according to Mongabay.
Some analysts also flag a key financing hurdle. The final investment decision still requires long-term buyers—called off-takers—for all 12 million tonnes per year of LNG. Securing those contracts before the end of 2026 may prove challenging, according to Gas Outlook. Vaca Muerta holds about 308 trillion cubic feet of shale gas, but only around 7% has been developed so far.
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