Recently, YPFArgentina’s state-owned oil company, has hired international consultancy Arthur D. Little to audit the site selection process for a mega investment in a liquefied natural gas (LNG) plant.
This project of YPFwhich will be carried out in collaboration with the Malaysian company Petronas, has generated great tension between President Javier Milei and the governor of the province of Buenos Aires, Axel Kicillof.
The investment, estimated at between $30 and $50 billion, is one of the largest in Argentina’s history and has the potential to significantly transform the country’s trade balance.
The LNG plant will allow the export of gas extracted from Vaca Muerta, one of the largest shale gas formations in the world, to international marketsThe decision to hire Arthur D. Little, a Boston-based consultancy with extensive experience in the energy sector, is intended to ensure transparency in the process of selecting the site for the plant.
This measure seeks to prevent the decision from being perceived as influenced by political issues, given the high profile of the project and the economic and political implications it entails. The dispute over the location of the plant has pitted two provinces against each other: Buenos Aires, governed by Axel Kicillof, and Río Negro, under the administration of Alberto Weretilneck.
Buenos Aires has proposed the city of Bahía Blanca as the ideal site for the plant, while Río Negro has suggested Punta Colorada. The choice of location depends not only on technical and logistical factors, but also on the adherence of the provinces to the Large Investment Incentive Regime (RIGI), a regulation that grants tax and exchange benefits to investment projects exceeding 200 million dollars.
RIGI
Río Negro was the first province to join the RIGI, which gives it a competitive advantage in the dispute. For its part, Buenos Aires is preparing a similar provincial regulation so as not to be left behind in the competition for investment.
This situation has generated tensions between Milei and Kicillof, who have exchanged public statements on the subject. President Milei has expressed his preference for Río Negro, arguing that the province has already met the RIGI requirements and that its location is more favorable for the project. YPF.
