OREANDA-NEWS. Argentina and Uruguay are finalizing details on a natural gas-purchase agreement, a major step toward reviving Uruguay?s plan to install an LNG terminal.

"I think that within a year, a year and a bit, we will be sending gas to Argentina," Uruguay President Tabare Vazquez said yesterday after a meeting with his Argentinian counterpart Mauricio Macri. "For Uruguay this implies that the work on the regasification plant will be completed."

Because of its limited gas demand, tiny Uruguay had billed itself as a regional hub, in which LNG, pipeline gas or gas-based electricity would be sold to Argentina and Brazil.

Argentina has long been seen as the main anchor for Uruguay?s project, and talks have been ongoing for years. In August 2013, Uruguay's state-owned oil company Ancap and Argentina's state-controlled YPF reached a preliminary agreement that would allow Uruguay to export up to 5mn m3/d (177mn ft3/d) of gas to Argentina starting in 2015.

But Uruguay's energy ambitions have been plagued with problems, in part because the project?s main subcontractor, Brazilian firm OAS, fell into financial straits when it became engulfed in a corruption scandal tied to Brazil?s state-controlled Petrobras.

In September, Uruguay revoked the contract it had signed to build the plant with France?s Engie.

Engie signed a 15-year build, own, operate and transfer contract with Uruguay?s Gas Sayago for the GNL del Plata offshore LNG terminal in October 2013, and brought on Marubeni as a 50pc partner in GNLS in February 2014.

Gas Sayago is a joint venture between Ancap and state-owned utility UTE.

Once a reliable regional gas exporter, Argentina has turned into a major importer of LNG and pipeline gas from neighboring Bolivia. The about-face began in 2004, when Buenos Aires decided to give priority to the domestic market as production waned and demand soared.

Argentina now has two LNG receiving terminals, at Bahia Blanca and Escobar in Buenos Aires province.