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UPDATE 2-Gazprom in talks with Argentina's YPF on LNG supplies
September 4, 2012 / 2:22 PM / 5 years ago

UPDATE 2-Gazprom in talks with Argentina's YPF on LNG supplies

* Argentine LNG imports have surged in recent years

* State-controlled oil company says shale also discussed

* YPF aims to boost domestic production, reduce imports

MOSCOW, Sept 4 (Reuters) - Russia’s Gazprom said on Tuesday it had discussed supplying liquefied natural gas (LNG) to Argentina’s state-controlled YPF , which eventually wants to reduce fuel imports by boosting domestic output.

YPF, nationalized by President Cristina Fernandez earlier this year, said the talks at the Russian group’s Moscow office had also included developing the South American country’s vast shale energy resources.

YPF hopes to lure deep-pocketed partners to invest at the Vaca Muerta shale site, which could hold enough energy resources to double Argentina’s oil and natural gas output within a decade.

“The parties discussed the possibility of liquefied natural gas supply to Argentina from the Gazprom Group portfolio,” Gazprom said about the meeting between its chief executive, Alexei Miller, and his counterpart at YPF, Miguel Galuccio.

Gazprom, which is exploring for natural gas in Venezuela as part of a Russian consortium, gave no other details.

Galuccio, who said last week that YPF would need to invest $37.2 billion over the next five years to meet its production targets, called Tuesday’s meeting “another open door where we can advance on our ambitious goals,” according to a company statement.

Latin America’s third-biggest economy, Argentina has been stepping up imports of LNG in recent years to bridge the gap between growing demand and flagging domestic production. Natural gas output has fallen 15 percent since 2004.

Fernandez’s left-leaning administration blamed the country’s rising fuel bills on underinvestment by YPF when it was controlled by Spain’s Repsol, prompting the controversial takeover of the company.

Gazprom operates the Sakhalin-2 LNG plant, the only such enterprise in Russia, with annual production of 10 million tonnes. It plans to double LNG capacity by building another plant in the Pacific port of Vladivostok.

But the production of LNG is facing challenges from increased shale gas production in the United States, as well as sagging demand for the fuel in Europe.

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