A prominent pipeline initiative endorsed by Javier Milei’s administration opted for a foreign supplier rather than a domestic behemoth led by one of Argentina’s wealthiest individuals, serving as a litmus test for the President’s commitment to a free-market approach aimed at liberalizing a protectionist economy. Southern Energy SA, the private consortium spearheading the construction of the conduit designed to transport gas from Argentina’s shale hub in Patagonia to the Atlantic coast, has awarded a contract to India’s Welspun Living Ltd, following their proposal to supply pipes for approximately US$200 million. The bid was 40 percent lower than the initial proposal from the Techint Group subsidiary Tenaris SA, under the leadership of billionaire Chairman Paolo Rocca. Tenaris, which has reportedly made follow-up offers to align more closely with Welspun’s bid, is contemplating the filing of an anti-dumping claim, as stated by a company spokesperson, who noted that Welspun sources materials from China for its pipes. The Techint unit additionally requested “first refusal” from Southern Energy to enhance its proposal, as stated by Argentina’s Deregulation & State Transformation Minister Federico Sturzenegger.
Southern Energy is under the leadership of Pan American Energy Group alongside the state-owned energy entity YPF SA, with three additional energy firms holding minor stakes in the initiative. A company official asserted that the Argentine government did not exert influence over the auction, and confirmed that Welspun’s bid presented the lowest price and most favorable payment terms among the six firms that successfully completed technical evaluations. The official noted that the Tenaris offer was the highest in cost. Rocca, 73, stands as a prominent figure in Argentine business circles, with his companies frequently securing public works contracts, given their status as the leading producer of pipes and various industrial materials. While Rocca expressed optimism regarding the new president at the outset of Milei’s term, by August he acknowledged that the implementation of the government’s pro-business reforms was proceeding more slowly than anticipated. “It is likely that we were overly optimistic in our belief that this could be achieved in the near term.” Rocca stated.
Sturzenegger, leading the charge on Milei’s economic reforms, issued a robust defense of the government’s choice to bypass Techint, despite the latter’s reduction in prices for the pipeline project. “Not supplying yourself with cheaper inputs would be bad business for companies and for the country,” Sturzenegger articulated, which Milei subsequently highlighted. Should the government provide Tenaris with first refusal, “the result would be much less future competition in the sector and, eventually, higher costs.” The pipeline represents yet another chapter in Milei’s fraught relationship with Argentina’s corporate elite, whom the libertarian has criticized for being excessively sheltered in an economy that has historically lacked global competition, owing to persistent inflation, political volatility, and trade restrictions. Despite commendations from both domestic and international investors, he has encountered conflicts with banks regarding regulatory measures, with builders concerning public infrastructure projects, and with tourism enterprises over his currency strategy.
The latest dispute revolves around one of Argentina’s most ambitious infrastructure initiatives, as Milei’s administration places its bets on a significant increase in production from the Vaca Muerta shale formation to drive overall economic growth. The pipeline is set to extend for hundreds of kilometres and represents a significant effort to elevate the crisis-prone South American nation’s role in global energy markets.