New LNG investments and projects in a Latin America with few connections

Liquefied Natural Gas (LNG) has become an important pillar of global energy security. The process, which involves cooling natural gas to -162°C to reduce its Issue 600 times, transforms it into a commodity that can be transported by sea, freeing it from the rigidity of pipeline connections. For a region such as Latin America—with vast resources but often fragmented energy infrastructure—this subject is a critical component in efforts to stabilize national energy matrices.

The war in Ukraine and the disruption of the Russian gas market have highlighted the importance of being able to choose suppliers or markets regardless of geographical proximity, and for this, the shipment or reception of LNG by sea is essential. Latin America, separated from Eurasia and with fragmented gas pipeline connections linking the Western Hemisphere, has understood that LNG can change the geopolitical game.

The continent is home to a couple of established LNG exporters (Peru and Trinidad and Tobago); it also hosts some of the world's largest unconventional gas reserves (such as Vaca Muerta in Argentina), which could be exported to distant locations if the appropriate infrastructure existed; and it has net importers that depend on LNG to avoid energy deficits (Brazil and Chile).

Regional overview: Infrastructure of contrasts

Latin America is not a homogeneous player in the LNG market. The few countries that participate in it are divided into two blocs—exporters and importers—depending on whether they have one of these two infrastructures:

1. Liquefaction Plants: These are facilities that take gas from deposits, process it, and cool it for loading onto methane tankers. These subject plants require billions of dollars in investment.
2. Regasification Terminals: These receive imported LNG and return it to its gaseous state for the network . The core topic innovation core topic the region has been the adoption of FSRUs (Floating Storage and Regasification Units), which stand out for their rapid deployment, lower investment costs, and ease of relocation.

Export

Currently, only two Latin American countries have significant operational capacity to export LNG. For decades, Trinidad and Tobago has been one of the leading LNG exporters in the Western Hemisphere. Its Atlantic LNG complex in Point Fortin (a joint venture between Trinidad's state-owned gas company, Shell, and BP; China's CIC has left the consortium) is one of the largest liquefaction plants in the world, with four production trains. However, the country faces a severe structural challenge, as it has suffered a chronic decline in natural gas production. The lack of feedstock gas has led to the plant operating well below its nominal capacity in recent years, prompting it to establish an agreement to develop the Dragon field in Venezuelan waters and send the gas from there to Atlantic LNG. However, this project recently suspended by the Maduro government in October 2024 following the country's support for the US naval deployment in the Caribbean.

The other major exporter in the region is Peru. Since 2010, the country has been operating the Peru LNG plant in Pampa Melchorita, the first liquefaction plant in South America. With a capacity of 4.45 million tons per year (MTPA), this facility processes gas from the Camisea fields in the Amazon rainforest. Although Peru entered the LNG market relatively late, it has managed to position itself as a provider , mainly for the Asian markets (South Korea, Japan, China) and, more recently, Europe, after consolidating its transport and liquefaction infrastructure. Its role has recently been reinforced by the increased participation of the US group MidOcean Energy in the consortium led by Texas-based Hunt Oil.

Import

Brazil has often been the Latin American country with the highest LNG imports, but its demand is particularly volatile, mainly due to the hydroelectric matrix that meets the country's energy needs. When severe droughts affect hydroelectric generation, LNG imports skyrocket, turning the country into a major destination for US LNG. To manage this fluctuating demand and ensure backup, Brazil has accelerated the adoption of FSRUs (floating terminals), which allow for rapid deployment of regasification infrastructure.

Chile was the pioneer importer in South America, motivated by gas cuts from Argentina in the 2000s. It developed two core topic land terminals core topic GNL Quintero and GNL Mejillones) that have given it energy independence and security, allowing it to access the global maritime market and regional suppliers such as Peru. LNG is now a strategic pillar for the country's decarbonization, allowing it to replace coal in power generation and diesel in the mining industry.

For its part, Argentina is home to the Vaca Muerta field, the reservation second largest reservation of shale gas (unconventional). However, due to a lack of gas pipelines and liquefaction plants, it is a seasonal importer. In winter, it imports LNG at international prices via FSRU to meet residential demand. It is anabsurd status : a country with vast resources imports the same product at a much higher cost.

Projects that would define the map

The solution for Argentina is to build a liquefaction plant. The project ambitious project is Argentina LNG, led by YPF. This megaproject seeks to take advantage of the vast reserves of Vaca Muerta to build a plant with a capacity of up to 24 MTPA, positioning the country as a global exporter. Success depends on huge investments and a stable framework . If it comes to fruition, it would alter trade flows in the South Atlantic and solve the country's energy balance.

Mexico is developing a model LNG "maquila" model . This approach is approach based on its own reserves, but core topic on taking core topic of its location and access to cheap gas from Texas via pipeline. core topic projects core topic the Pacific coast, such as Energía Costa Azul (ECA) and Saguaro LNG, will import US gas, liquefy it, and export it to premium markets in Asia, offering a shorter route that avoids congestion in the Panama Canal.

Key points

The LNG sector in Latin America is a market of dualities. It is defined by a critical gap between vast geological resources and the capital-intensive infrastructure needed to monetize them. The scenario can be summarized as follows:

1. Established exporters: Trinidad and Tobago struggles to secure gas for its plants, while Peru maintains stable operations in the Pacific.
2. Dependent importers: Brazil and Chile will remain core topic buyers, with demand in Brazil subject to climate volatility.
3. The triggers for change: The future of the regional market will be determined by two core topic factors: first, Argentina's ability to finance and execute its mega-projects for liquefaction in Vaca Muerta; and second, the success of Mexico model LNG model , which uses US gas.

Monitoring the investment climate in Argentina and construction progress in Mexico will be essential to anticipate the next major transformation of the regional energy map.