Argentina approves Bahía Blanca-Vaca Muerta rail project

Argentina’s federal government greenlighted a more than US$900mn cargo-passenger rail project.

The work involves bringing back into service a section of the General Roca rail system between Buenos Aires province port city Bahía Blanca and the country’s biggest oil and gas province by output, Neuquén.

Chinese firm CMEC, along with public and private contributions, would cover the cost of the work, the transport ministry said in a statement.

The project would help reduce the cost and time associated with transporting consumables used in the hydrocarbons industry, the ministry said in a resolution. 

Oil and gas in Neuquén is chiefly extracted via fracking at the Vaca Muerta play, a process that requires water, chemicals and sand. 

Taking into account both overhauling and expansion work, the project involves 653km of rail line. The work on the section – referred to as the Norpatagónico – also includes new yards, signaling, a new port access and crossings, and around 77km of new track from Cinco Saltos in Río Negro province to the town of Añelo in neighboring Neuquén. 

State railroad company Trenes Argentinos Infraestructura is in charge of the project. In 2018, the then government of center-right president Mauricio Macri announced a public-private partnership to bring back into service 700km of line.

In terms of shipping crude from Vaca Muerta toward demand and export hub Buenos Aires, capacity of an existing pipeline has been expanded and there are calls for a new duct. On the gas front, a US$1.6bn first phase of a natural gas pipeline megaproject that would help ease a Vaca Muerta dispatch bottleneck advanced last week. 

In May, production of unconventional oil and gas hit a record high in Argentina. Neuquén is home to most of the Vaca Muerta shale play, which has been driving national hydrocarbons growth.

Nationally, oil output averaged 584,000b/d in May, up 14% year-on-year, and gas production grew 12% to 136Mm3/d. Unconventional oil output averaged 241,000b/d, up 57% year-on-year, while unconventional gas production was 76Mm3/d, up 39% year-on-year.

Neuquén’s goal is to reach 700,000b/d oil by 2030. The province’s target for this year is 308,000b/d. Production in April was around 265,000b/d, according to data from the province’s energy and natural resources ministry.