The first new facility of this kind to be approved by Pampa Energia SA in over 25 years is a 2.7 billion US dollar urea fertiliser factory on the Atlantic coast of Argentina. Although Argentina has lately prioritised oil production from its prolific Vaca Muerta shale deposit due to its ease of transportation and export, the country is now racing to increase output of natural gas. Fertiliser production uses natural gas, providing drillers with yet another market for the energy product. Additionally, the plant will fortify local supply lines for the agricultural feedstock, decreasing dependency on exports from the Middle East.
According to the company’s regulatory filing on Friday, the plant has been given the green light to begin production of ammonia and urea, with an annual capacity of 2.1 million tonnes. Investors who have been following Pampa’s progress have been keeping a careful eye on the project. Chief executive officers stated on a May earnings call that it may generate $1 billion in yearly income. Marcelo Mindlin, an Argentine business magnate, chairs the corporation, which has been increasing its focus on shale oil production in addition to its already substantial power generation and natural gas production.
This factory, which will be constructed in Bahía Blanca, Argentina’s petrochemicals capital, over the course of three years, is part of a larger trend where the country is trying to discover methods to make money off of its enormous shale gas reserves. Pampa is involved in the Southern Energy SA LNG project, while another larger LNG venture comprising Adnoc, the state oil corporation of Abu Dhabi, and Italy’s Eni SpA is also awaiting funding. A large expansion is also being considered by Profertil SA, an existing fertiliser facility in Argentina.
The final investment decision by Pampa is a huge win for RIGI, the flagship investor program of President Javier Milei that offers substantial tax incentives. The filing stated that RIGI approval is “essential” and is still waiting. Supercharging development in the Vaca Muerta, RIGI has attracted a plethora of proposals in shale-drilling areas and pipeline and processing infrastructure.