Southern Energy (SESA), the society pooling the energy companies selling Vaca Muerta liquefied natural gas (LNG) to the world, has signed a historic framework agreement with the international German company Securing Energy for Europe (SEFE) to supply natural gas to Europe.
The deal covers two million tons annually, which signifies that almost all the capacity of one of the two vessels which will be operational for exporting as from September 2027 will be during the following eight years.
The agreement – which will need ratification “in the next few months” when it takes final form – carries a triple meaning: the success of the business initiated by the companies which bet on seaborne exports, headed by PAE (Pan American Energy), to accelerate sales to the world; the sustained generation of hard currency to achieve financial balance; and Europe’s diversification of its energy supplies, which had shown instability in the context of war between Russia and Ukraine, among others.
Depending on the global quotes of gas, which is a commodity whose price fluctuates according to the market, the LNG exports could reach a value superior to US$7 billion during the life of the agreement, according to the calculations made by the companies. That business will create a source of genuine hard currency for Argentina while contributing to energy security in Europe.
“Southern Energy, consisting of PAE, YPF, Pampa Energía, Harbour Energy and Golar LNG, and SEFE (Securing Energy for Europe), a recognised international company owned by the German federal government, have signed a framework agreement for the annual sale of two million tons of LNG for eight years. The operation will presumably be the biggest sale of LNG from Argentina to the world in terms of volume and duration,” a press communiqué stated.
The vessel carrying LNG from Vaca Muerta to Europe will be the Hilli Episeyo, the first of the two liquefier boats which will be installed by SESA in the San Matías Gulf, Río Negro Province.
European demand, as signed with the German state company, represents over 80 percent of the volume of liquefied gas which that boat has the capacity to produce (2.45 millions tons of LNG annually). When compared with the two boats which will be operational, the European share in just this operation will be over 30 percent of the joint productive capacity (six million tons of LNG annually).
As company sources note, the framework draft signed now will have to result in a final sales agreement between the parties during the next few months.
According to the conditions of the terms agreed, ratification will be a formality for a business giving all sides stability for almost a decade.
First major LNG sale
The agreement was signed by Rodolfo Freyre, chairman of Southern Energy, and Frédéric Barnaud, chief commercial officer of SEFE, with PAE CEO Marcos Bulgheroni, Santiago Martínez Tanoira, YPF’s Executive Vice-President for Gas and Energy, Pampa Energy vice-president Horacio Turri, the executive director of Exploration and Production, Martin Rueda, the managing director of Harbour Energy in Argentina and Golar LNG CCO Federico Petersen also present.
Freyre, representing Southern Energy, affirmed: “The agreement signed with SEFE will constitute the first LNG sale on a major scale from Argentina, representing a milestone for the future development of Vaca Muerta’s natural gas reserves.”
“We’re proud of taking this first step in the global LNG market with an internationally recognised player like SEFE,” he underlined.
SEFE CCO Barnaud assured: “SEFE’s first LNG agreement with a South American supplier not only contributes to the geographical diversification of our portfolio but also boosts Europe’s energy security.”
“We are pleased to accompany Argentina on its road to becoming a global LNG exporter. This also gives SEFE a valuable opportunity to continue its collaboration with the Hilli Episeyo team as they switch from Cameroon to Argentina,” he added, referencing the vessel.
Formed in 2024, Southern Energy is a company composed of PAE (30 percent), YPF (25 percent), Pampa Energía (20 percent), Harbour Energy (15 percent) and Golar LNG (10 percent) “whose aim is to position Argentina as a new supplier in the global LNG market as from 2027.”
SESA confirmed an investment of over US$15 billion to export LNG for 20 years from two liquefier vessels installed in the San Matías Gulf.
The company forecasts reaching exports of over US$20 billion between the start of operations in 2027 and 2035. The SESA project provides for the creation of 1,900 direct and indirect jobs, predominantly local, during the construction phase with an elevated participation of local suppliers during the operation of the project.
SEFE, an international energy company, said the deal “looks after the security of supplies while pushing its clients to reduce carbon emissions.” The firm’s activities cover the energy value chain, from the origins and marketing to sales, transportation and storage.
Owned by the German government, SEFE employs some 2,000 people worldwide and its 50,000 clients range from small companies to municipalities and multinational organisations.
“Thanks to its decades-long experience in the marketing and development of its LNG business, SEFE has become one of the most important suppliers of industrial clients in Europe with an annual sales volume of 200 TWh [terawatt-hours] of gas and energy. By investing in clean energies and especially in the ecosystem of [green] hydrogen, SEFE is contributing to energy transition,” highlighted a press statement.
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