Shell withdraws from Argentina LNG's initial phase, project continues

Shell has withdrawn from the initial phase of the Argentina LNG development, a move that reshapes the early configuration of the export project designed to monetize Vaca Muerta’s unconventional gas resources through a plant to be built in Sierra Grande, Rio Negro province, on Argentina’s Atlantic coast. 

The company’s withdrawal applies specifically to Phase 1, the “base module,” but Shell indicated it may consider involvement in later expansion stages depending on project progress and commercial conditions.

In a statement, Shell said it continues to see Argentina as a potentially attractive growth market for LNG export, and that it is “continuing to explore expansion options with YPF for Argentina LNG.”

Shell’s departure accelerated negotiations among remaining partners. YPF, ADNOC (through international unit XRG), and Eni SpA are finalizing a binding agreement that will formalize governance, technical responsibilities, and commercial terms for the restructured consortium.

The binding agreement will enable JP Morgan, recently appointed as financial advisor, to begin structuring a project-finance package for the estimated US$20 billion capital requirement. 

The consortium continues to target a final investment decision (FID) in first-half 2026.

Despite Shell’s exit, the development plan for Phase 1 remains unchanged with plans for two floating LNG (FLNG) units with combined capacity of 12 million tonnes/year (tpy). A potential Phase 2 could expand the project to up to 18 million tpy.

According to filings reviewed by regulators, Shell’s decision was due to alterations in project scope relative to the pre-FEED concept—in sequencing, risk allocation, and technical configuration—that no longer aligned with its criteria for participation.