GENERAL ROCA, Río Negro – A major milestone has been reached in the construction of the VMOS pipeline, the largest private infrastructure project in Argentina in recent years. The pipeline’s duct was successfully installed 40 meters below the bed of the Negro River yesterday, completing the most technically challenging segment of the project. This achievement paves the way for the project’s final stages, bringing Argentina closer to significantly increasing its oil export capacity.
While operations are slated to begin in November, the first oil exports aren’t expected until late January or early February. Filling the 437-kilometer pipeline and its two accompanying storage tanks near the Punta Colorada port requires approximately 1.2 million barrels of oil, a process that will take at least 30 days to complete. This recent infrastructure is poised to reshape Argentina’s export matrix, offering a more efficient route to global markets.
“From the moment the first drop of oil is transported to when it’s exported on a ship, it can take two to two and a half months, because you also have to fine-tune the entire system,” explained Gustavo Gallino, president of the VMOS consortium and YPF’s Vice President of Infrastructure, during a commemorative event. The project represents a substantial investment in Argentina’s energy future and a commitment to expanding its role in the global oil market.
A Boost for Argentina’s Oil Exports
Argentina currently produces 882,000 barrels of oil per day, with 570,400 barrels destined for domestic consumption and around 300,000 barrels exported. Industry goals aim to reach one million barrels of daily exports by 2028, with the VMOS pipeline playing a crucial role in achieving this target. The pipeline has a capacity to transport up to 550,000 barrels per day by the second half of 2027, with potential for expansion to 700,000 barrels per day.
This increased capacity builds upon expansions made last year by Oldelval – a company owned by oil producers – which raised the capacity of the pipeline connecting the Neuquén basin to Bahía Blanca to 540,000 barrels per day. The combined effect of these infrastructure improvements will position Argentina as a more significant player in the international oil market.
The choice of Río Negro as the export point is strategic. The province’s deep waters allow access for Remarkably Large Crude Carriers (VLCCs), capable of transporting around 2 million barrels. This reduces freight costs by $1 to $3 per barrel, translating to savings of up to $2 million per shipment and opening up new international markets for Argentine oil.
Private Investment Driving Infrastructure Development
The entire pipeline was constructed by UTE Techint-Sacde, the same consortium responsible for a significant portion of the Perito Moreno gas pipeline (formerly known as Néstor Kirchner) and the reversal of the northern gas pipeline. The UTE is also currently bidding on two major energy infrastructure projects: a 478-kilometer, 36-inch gas pipeline for liquefied natural gas (LNG) exports, and a 575-kilometer, 20-inch polydyct designed to export liquid gases like ethane, butane, propane, and natural gasoline, spearheaded by TGS.
Marcelo and Damián Mindlin, founders of Sacde and principal shareholders of Pampa Energía and TGS, expressed optimism about the sector’s outlook. “Foreign investors still want to see locals take the first step and produce the initial investments,” Marcelo Mindlin stated, noting recent investment announcements of $4.5 billion through Pampa Energía and another $3 billion with TGS to expand liquid gas exports.
Mindlin also addressed the international context, pointing to the current high prices of oil and gas driven by uncertainty in the Middle East, but characterizing it as a temporary situation. “European countries should appear to Argentina as an alternative supplier,” he suggested, referencing Germany’s recent contract to purchase LNG from Southern Energy (SESA).
Economic Impact and Future Outlook
Mindlin, who participated alongside President Javier Milei and his economic team at the Argentina Week event in New York, emphasized the role of infrastructure as an economic engine and job creator. He deferred to economists for commentary on the overall economic situation, stating, “Ask the economists how the activity is; entrepreneurs talk about the level of investment.”
Representatives from Techint Ingeniería y Construcción highlighted the challenge of leading Argentina’s largest crude oil transport project in recent years. Alejo Calcagno stated, “We are competitive and present very solid technical offers,” looking ahead to upcoming bids. Carlos Bacher, Chairman of Techint, noted that Argentina is experiencing a period of greater macroeconomic order, albeit with uneven impacts across sectors. “We have focused our activity on private clients for many years; we haven’t undertaken essential public works in Argentina for 20 years. As such, we view all of this very ambitiously,” he said.
The completion of the VMOS pipeline marks a significant step forward for Argentina’s energy sector. The next key milestone will be the commencement of operations in November, followed by the first oil exports anticipated between late January and early February. The successful implementation of this project will not only boost Argentina’s export capacity but also contribute to its economic growth and position it as a reliable energy supplier on the global stage.
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