San Matías Pipeline secures $900 million project finance for Argentina’s first dedicated LNG export gasoduct

San Matías Pipeline (SMP), the consortium comprising Pan American Energy (30%), YPF (25%), Pampa Energía (20%), Harbour Energy (15%) and Golar LNG (10%), finalized the seven-year syndicated facility with three years of grace at an interest rate of 4.25% plus SOFR, translating to approximately 8% annually. Between 10 and 12 international banks participated in the syndicate, including BBVA, Bladex, Barclays, ICBC and Bank of China alongside the four structuring lenders. The loan covers $900 million of the pipeline’s $1.3 billion total investment, with shareholders contributing the remaining $400 million in equity.

The financing relies on project finance methodology, whereby repayment derives from future cash flows secured by long-term transportation contracts rather than shareholder balance sheets. This structure enabled lenders to commit capital to Argentine energy infrastructure without sovereign backing, marking the first such transaction for the country’s nascent LNG export sector. The pipeline already entered the RIGI large investment incentive regime in June 2026 and obtained environmental permits from Neuquén and Río Negro provinces.

Civil works commenced in late August 2026 with right-of-way clearance by Argentine contractor Víctor Contreras and Italian firm SICIM, following the arrival of pipes manufactured by India’s Welspun. The 36-inch diameter pipeline will run from Tratayén in Neuquén to the Río Negro coast, with capacity to transport 27 million cubic meters of gas daily. An intermediate compression station at kilometer 80 in Río Negro, featuring 46,000 horsepower capacity, will be built by Oilfield Production Services. Construction is scheduled for completion by mid-2028.

The pipeline will feed two floating liquefaction vessels operated by Southern Energy (SESA), formed by the same shareholders. The Hilli Episeyo arrives in late 2027 with 2.45 million metric tons per annum capacity, followed by the MK II (renamed Esperanza) in 2028 with 3.5 million tons annual capacity. Combined output of 6 million tons annually positions SESA ahead of the competing Argentina LNG project led by YPF, Eni and XRG, which targets 2031 operations with $51 billion investment.

Germany’s state-owned Securing Energy for Europe already contracted 2 million tons annually for eight years starting late 2027, representing over 80% of the Hilli Episeyo’s capacity and potentially generating $7 billion over the contract term. SESA projects $20 billion in export revenues between 2027 and 2035, contributing $2.5 billion annually to Argentina’s trade balance once both vessels operate at full capacity.