A bunch of banks together with JPMorgan Chase & Co. and Citigroup Inc. are in talks to lend pure fuel producers in Argentina roughly $1 billion to construct a cross-country pipeline, in keeping with two folks acquainted with the matter.
The banks, which additionally embrace Banco Santander SA, are negotiating the syndicated mortgage with a consortium led by Pan American Vitality Group after an identical deal was struck final yr for a pipeline and port devoted to shale oil exports. That undertaking, often called VMOS, is at present beneath building. Extra banks might be a part of the financing for the fuel pipeline, the folks added.
Pan American, which is half-owned by British oil main BP Plc, holds a 30 p.c stake within the consortium, known as Southern Vitality SA. Argentina’s state-run power large YPF SA owns 25 p.c. Three different corporations, Pampa Energia SA, UK-based Harbour Vitality Plc and Golar LNG Ltd. even have smaller stakes within the undertaking.
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Negotiations are ongoing and phrases may nonetheless change earlier than an settlement finalizes.
JPMorgan and Citi declined to remark. Santander and Pan American did not reply to requests for remark.
Argentina’s Vaca Muerta shale patch is rising quick as President Javier Milei’s free-market reforms have opened up the power trade to international credit score, unleashing investments. The $2 billion mortgage for the oil pipeline was the most important undertaking financing in Argentina’s historical past, in keeping with JPMorgan.
Southern Vitality is now aiming to unlock the Vaca Muerta’s fuel potential with Argentina’s first floating liquefaction terminal for pure fuel. The pipeline would transport pure fuel from Vaca Muerta to the terminal on the Atlantic coast. Argentina holds the world’s second-biggest sources of shale fuel, and its day by day manufacturing averaged the equal of about 550,000 barrels final yr.
The consortium’s first leased liquefaction vessel, Hilli Episeyo, is about to begin manufacturing on the finish of 2027. The second, MKII, will be a part of a couple of yr later. Mixed annual capability might be 6 million tons, with many shipments going to Germany.
To begin, the vessels might be despatched fuel from southern Argentina, requiring solely small add-ons to an current pipeline community. However to service them totally, Southern Vitality must construct an unique pipeline from the Vaca Muerta, which the banks would finance.
Argentina has ambitions to spice up LNG exports past the Southern Vitality undertaking, however the plans do not but have the inexperienced mild.
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