Private Initiative by TGS for More Than 700 Million Dollars
TGS proposes an investment in natural gas transportation infrastructure projects that, by 2026, would allow the substitution of expensive LNG and diesel imports, generating savings for the country.
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The energy company, co-controlled by Pampa Energía and the Sielecki family, presented to the Ministry of Economy a project for the execution and financing of the expansion of existing transportation systems with an associated investment of USD 700 million. Its main purpose is to make significant incremental volumes of natural gas available at the Litoral hub (14 MMm³/d) by the winter of 2026, to ensure energy supply reliability and substitute LNG and diesel imports for 100 days a year with gas from Vaca Muerta, in addition to boosting exportable surpluses to the region.
The project is based on maximizing the use of existing transportation infrastructure, achieving high efficiency in terms of the amount invested per cubic meter transported, which translates into lower costs for the end user and shorter construction timelines. This private initiative will replace LNG and diesel imports during the winter period, which currently compensate for the natural gas deficit from the Northern and Southern basins of the country, with prices ranging from USD 11 to 18 per MM BTU, 3 to 5 times higher than the prices for gas sold from the Neuquén Basin.
TGS clarified that the project is complementary and does not exclude the possibility of advancing with the construction of Section II of the GPNK and/or any other infrastructure works that promote the development of Vaca Muerta and regional energy integration. The plan includes expansion works in two systems with different regulatory frameworks. On one hand, a project is proposed in the Tratayén – Salliqueló section of the GPNK, under the Hydrocarbons Law and applying the Private Initiative Regime (IP), which requires a bidding process to receive and award offers from interested parties. The project could be operational by the winter of 2026, requiring the awarding process to be completed before November of this year.
Additionally, the project is complemented by an expansion in the regulated TGS system, which TGS will finance and execute under the terms of its license, allowing the incremental natural gas arriving at Salliqueló via the GPNK to access the GBA area, and then be transferred to the TGN system towards the Litoral area. The work on the GPNK involves installing three new Compressor Plants with a total of 90,000 HP and an investment of approximately USD 500 million. The work on the regulated TGS system includes the installation of 20 km of pipeline loops and 15,000 HP of compression in the Neuba II Pipeline, plus other works and tests to increase its maximum operating pressure, with an estimated investment of USD 200 million that TGS would finance even if not awarded the GPNK expansion.
"Vaca Muerta's reserves are equivalent to more than 120 years of domestic consumption," said Oscar Sardi, CEO of TGS, adding that "it is imperative for Argentina to have the necessary infrastructure to capitalize on these resources during the energy transition." Gustavo Mariani, CEO of Pampa Energía, and Luis Fallo, Executive Director of the Sielecki group, highlighted that "Since 2019, TGS has been investing more than USD 700 million in Midstream facilities to support the development driven by gas producers in Vaca Muerta. This project, which adds another USD 700 million, reinforces TGS's and its shareholders' commitment to trusting and betting on the country's economic and social growth." Additionally, Mariani noted that "if the Bases Law is approved, the framing of private investment within the RIGI will result in lower gas transportation rates for users."
The benefits to Argentina's trade balance will amount to more than USD 700 million per year, and in terms of fiscal savings, around USD 500 million per year, due to the substitution of these imports starting from the project's commissioning. This does not consider the earnings from the natural gas surpluses that could be exported to the region during the summer when domestic demand decreases.
The project will also stimulate growth in various economic sectors. Notably, the positive impacts on Upstream, considering that the development of 14 MMm³/d of incremental natural gas production will require the drilling and completion of approximately 20 wells in the initial stage, with an estimated investment of around USD 400 million. This is without including the investments required in the midstream that would add more than USD 450 million in conditioning facilities for the new gas to be transported.
"We are convinced that this is the most efficient expansion project at this time. Its significant contribution to supply and shorter construction timeline will allow Argentina, starting in 2026, to prioritize its own resources, ceasing to spend USD 700 million per year on imports that could be replaced by Neuquén gas at a cost of USD 200 million, generating significant savings and ensuring internal supply each winter," said Oscar Sardi.