Vaca Muerta infrastructure project nears $1 billion financing package

(Bloomberg) – Citigroup, Banco Santander SA and JP Morgan are among lenders working on a roughly $1 billion finance package for a project by Transportadora de Gas del Sur SA in Argentina’s Vaca Muerta shale formation, according to people familiar with the matter.

The details of the package are still being negotiated, said the people, who declined to be named because the news is not yet public.

The financing would help support a $3 billion investment known as the NGL Project, one of the largest private-sector energy infrastructure developments underway in Argentina. The company has said it expects the project to generate roughly $1.2 billion in annual exports once operational.

TGS, which is partly owned by energy company Pampa Energia SA, announced the project during an event in New York in March. It includes new gas processing facilities at an existing plant in Tratayen, near the Vaca Muerta shale basin, a 573-km pipeline to Bahía Blanca on Argentina’s Atlantic coast, and export facilities. The company has said it plans to seek incentives under President Javier Milei‘s RIGI investment regime, which offers tax and foreign-exchange advantages for large projects.

Representatives for Citi, JP Morgan, Santander and TGS declined to comment. 

TGS has described the project as the largest of its kind in the region and a “critical investment” that will help overcome one of the country’s “main infrastructure bottlenecks," enabling Vaca Muerta to access new export markets. The company has signed preliminary agreements with several major Vaca Muerta operators.

The deal would deepen a growing trend toward project financing in Argentina’s fast-expanding energy sector. Last year, the Vaca Muerta Sur oil pipeline secured a $2 billion syndicated loan from a group of international banks. State-controlled YPF SA is also pursuing financing for its Argentina LNG export plan, potentially drawing funding commitments in the $14 billion area.

The natural gas liquids project is a key build-out for burgeoning shale patch Vaca Muerta because it provides oil drillers with an outlet for all the so-called associated gas that comes out of the desert rock when they produce crude — helping to mitigate infrastructure bottlenecks that have plagued development in the past.

Shale oil production is expected to rise to about 1 MMbpd by the end of the decade from the current 600,000 bbls as producers increase investment under President Javier Milei’s market-friendly policies. Energy exports have become an increasingly important source of hard-currency inflows which have supported the peso throughout the war in Middle East.