Vaca Muerta LNG: How the SEFE Deal Organizes Argentina–Germany Trade Relations

The announcement by Southern Energy and SEFE marks a turning point in how Argentina positions itself in the global LNG market.

The Southern Energy consortium made up of PAE, YPF, Pampa Energía, Harbour Energy and Golar LNG reached a Heads of Agreement with Germany’s state-owned SEFE Securing Energy for Europe for the sale of up to 2 million tonnes per year of LNG over eight years, with deliveries expected from late 2027. What does this mean, and what are the consequences?

First things first: the document still needs to be translated into a final sale and purchase agreement (SPA). SEFE itself presents it as the path toward Argentina’s first long-term LNG supply contract. According to reporting by Shale24, based on industry sources and public filings, the committed volume represents about a third of Southern Energy’s future annual output and could generate more than $7 billion in exports over the life of the deal, depending on global price trends.

The gas will come from the Vaca Muerta shale formation, be transported by new pipelines to the coast of Río Negro and liquefied on two floating LNG units (FLNGs) operating in the Golfo San Matías. The first vessel, the Hilli Episeyo, will provide about 2.45 million tonnes per year starting in late 2027. The second, known as MK II, will add another 3.5 million tonnes beginning in 2028. Both will be chartered to Southern Energy by Golar LNG under 20-year contracts. The overall project represents more than $15 billion in investment, including pipelines, onshore infrastructure and the two liquefaction units.

Germany: Filling terminals and diversifying away from Russian gas

The agreement fits into Germany’s energy strategy over the past three years. After Russia’s invasion of Ukraine and the sharp drop in pipeline deliveries, Germany accelerated the development of LNG import capacity, primarily through floating storage and regasification units (FSRUs) in places such as Wilhelmshaven, Brunsbüttel and Mukran, alongside plans for onshore terminals around 2026-27.

Data from state-owned Deutsche Energy Terminal (DET) show that Germany’s LNG import terminals have already injected tens of terawatt-hours into the gas system this year, while regasification capacity continues to expand toward 2027. At the same time, industry reports indicate that some recent capacity auctions failed to allocate all available slots, reflecting a European market with softer demand than at the peak of the crisis, yet still in need of diversified supply sources to fully replace Russian gas. In that context, according to industry sources consulted by Shale24, agreements like the one with Southern Energy serve three functions for Germany:

1. Ensure base load volumes for new terminals, making use of infrastructure already financed.
2. Diversify LNG supply by adding a South American source to a portfolio dominated by the United States, Qatar, Norway and North Africa.
3. Reduce operational risk by using a structure SEFE already knows. The company is a customer of the Hilli Episeyo in Cameroon and will now transfer that experience to the same vessel processing Vaca Muerta gas.

The political message is also clear: Berlin can frame the deal under its “security of supply during the transition” narrative. LNG serves as backup while renewables expand and terminals prepare to handle hydrogen or ammonia later in the decade.

Argentina: Vaca Muerta seeks its first structural LNG buyer

For Argentine side, the agreement solidifies a strategy that has been under discussion for years: turning Vaca Muerta’s structural gas surplus into long-term export capacity. The shale formation in Neuquén has already delivered a major increase in the supply of unconventional gas and helped reduce the weight of imports in the country’s energy balance. The next step was finding a buyer willing to sign contracts with enough duration to finance liquefaction infrastructure.

Southern Energy is the vehicle chosen to make that leap. Formed in 2024, the company positions itself as Argentina’s first large-scale LNG export project, with two FLNG units totaling around 6 million tonnes per year of capacity.

The contract with SEFE acts as an “anchor offtake” to support the final investment decision for the first vessel and to accelerate construction of the pipelines that will connect the Neuquén Basin with the coast of Río Negro, according to information gathered by Shale24. The recent arrival of pipes at the port of San Antonio Este, destined for the LNG pipeline, is a concrete sign of that progress.

The chosen model matches YPF’s long-standing push for floating liquefaction instead of a single large onshore plant: faster build times, greater flexibility and less exposure to shifts in global gas demand cycles.

For Argentina’s macroeconomy, beyond the specific export figures, the real turning point is elsewhere: for the first time, a European state-owned buyer is agreeing to commit to significant volumes of Argentine LNG under a long-term contract. That sends a signal about how the country’s regulatory and operational risk is being perceived.

What Germany requires and what Argentina expects

Behind the 2 million tonnes per year are conditions that explain why this deal is coming together only now.

On Germany’s side, the priority is regulatory predictability. An eight-year contract requires clarity on export rules, taxes and access to the foreign-exchange market. Officials in Berlin and the banks that will need to finance the project are reading the deal in light of Argentina’s Regime of Incentives for Major Investments (RIGI) and the specific regulatory frameworks for energy infrastructure that the Argentine government is discussing.

The second condition is environmental. The European Union is moving forward with stricter rules on methane emissions and traceability of imported gas. To keep the contract running smoothly, the Argentina FLNG project will have to demonstrate the ability to measure and mitigate leaks throughout the entire chain, from Vaca Muerta to the point where the LNG leaves the Gulf of San Matías.

In the other direction, Buenos Aires and Neuquén see Germany as more than just a customer.

Argentina, in return, expects:

1. A competitive pricing mechanism, likely linked to European hubs, that can cover upstream, transport and liquefaction costs with a margin relative to U.S. and Qatari supply.
2. Visibility beyond the formal eight-year term. The FLNG units are designed for 20 years of service, and the industry expects a strong performance in the first phase to lead to extensions or new contracts with SEFE or other buyers.
3. A gateway into Europe’s energy discussions. Having a German state-owned company as the first major buyer of Argentine LNG positions the country in key debates in Brussels over energy security, methane rules and financing for transition projects.

According to sector sources consulted by Shale24, the deal formalizes a relationship that until now relied largely on diplomatic efforts and announcements without a firm commercial anchor. For Germany, it will supply part of the capacity of terminals built at speed after Russian gas supply collapsed. For Argentina, it gives Vaca Muerta its first structural LNG customer and helps turn a $15 billion project into something more consequential for the country’s future.