JPMorgan and Citi Among Banks Tapped For Argentina Pipeline Loan

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(Bloomberg) — A consortium of oil drillers developing a key pipeline in Argentina is tapping five major banks to finance a $1.7 billion loan for the project, according to people familiar with the matter. 

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Led by Argentina’s state-run driller YPF SA, the group is in talks with Citigroup Inc., Deutsche Bank AG, Itau Unibanco Holding SA, JP Morgan Chase & Co and Banco Santander SA to finance part of the pipeline’s development, according to people familiar with the matter.

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YPF, which has a 27% stake in the pipeline, previously mentioned that the consortium is seeking a $1.7 billion syndicated loan without revealing the names of the lenders.

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The company’s chief executive said in an interview this month that talks for the loan are close to being completed. If and when that happens, it would be a significant feat for private project financing in Argentina, where such big deals have been few and far between in recent years because of the country’s economic crises and capital controls.

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The money would fund Vaca Muerta Sur which will feature a pipeline running from Argentina’s shale heartland across northern Patagonia to the Atlantic coast at Punta Colorada, where a port will be built to load tankers. The total cost is roughly $3 billion and the drillers will put down cash to help fund the rest.

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Beyond YPF, the other drillers include Chevron Corp., Shell Plc, Vista Energy, Pluspetrol SA, Pan American Energy Group, which is 50% BP Plc, and Pampa Energia SA.

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Representatives from YPF, Citi, Deutsche Bank, JPMorgan and Santander declined to comment while an Itau spokesperson did not immediately respond to a request seeking comment. 

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The project has been accepted into President Javier Milei’s relatively new program of tax, currency and customs loopholes designed to lure investments known locally as RIGI. It is currently in the early stages of gathering pipes, being provided by Tenaris SA, close to the shale fields.

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Companies see Vaca Muerta Sur as crucial to Argentina’s shale ambitions that could see it export 1 million barrels of crude a day by the end of the decade, helping transform the country into a global net energy provider. If construction happens on time, the pipeline is expected to transport 180,000 barrels a day in late 2026 and may eventually have capacity for 700,000 barrels.

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