Argentina's government on Monday approved a key $500 million private sector gas pipeline expansion project, a significant step in bolstering the country's energy infrastructure.

The project, proposed by Transportadora de Gas del Sur (TGS), aims to expand gas transportation capacity from the Vaca Muerta shale region to Buenos Aires province. The government will oversee the tender process.

This move marks a departure from traditional state-led infrastructure projects, aligning with the policies of newly elected President Javier Milei, who is prioritizing private sector involvement to address Argentina's energy deficit.

TGS's initial proposal, submitted in June, involves installing six compressor tube sets at four plants to increase the pipeline's capacity, with the project expected to expand the Perito Moreno gas pipeline and upgrade four compressor plants. 

This expansion project is expected to increase daily gas transportation capacity by 14 million cubic meters, bringing the total to 35 million cubic meters.

Argentina is actively working to maximize output from Vaca Muerta, the world's second-largest shale gas formation, and develop the necessary infrastructure to meet domestic demand and potentially export liquefied natural gas (LNG).

If successful in the tender, TGS plans to invest an additional $200 million in a second phase, involving the construction of 20 kilometers of new pipeline and further expansion of compression capacity in an existing concession area.