China Signs $4.7 Billion in Rail Projects with Argentina, Including Connection to the Country’s Massive Vaca Muerta Shale Gas Deposits

On December 15, Argentina’s Minister of Transport, Mario Meoni, acknowledged that a Norpatagonico railway rehabilitation agreement signed between the government and China’s state-owned China Machinery Engineering Corporation (CMEC) late last week, was partly intended to improve access to Argentina’s strategically significant Vaca Muerta shale gas deposits in the southern region of the country.

The shale gas deposits are considered to be the second largest in the world, holding the potential to transform Argentina’s energy landscape. In recent years, however, Buenos Aires has struggled to finance development of the gas field, which reportedly requires  $1.2 -$1.5 billion. Argentina is reportedly considering Chinese financing for the project.

The agreement with CMEC to rehabilitate the Norpatagonico railway was just one of four important railway revitalization projects signed between Argentina and Chinese companies on December 11, the total value of which was some $4.7 billion.  The companies included, China Railway Construction Corporation (CRRC), China Machinery Engineering Corporation (CMEC), CRRC Corporation, and Yutong. On June 12, CRRC was designated by the U.S. Department of Defense as being under the influence and control of the Chinese military.

The other agreements include the revitalization of the Belgrano Cargas and San Martin Cargas railway routes, which would help connect major agricultural centers of the country to critical ports of trade. Chinese investment in these projects aligns with the growing bilateral trade partnership between the two countries that is largely driven by Argentina’s agricultural exports to China.

According to Chinese media, China is Argentina’s second-largest overall trading partner and the country’s primary export market for agricultural goods.  More than 80% of Argentina’s exports to China are comprised of agricultural products. The four new agreements are expected to generate 28,000 jobs in Argentina and facilitate connectivity and port access across 13 productive agricultural regions.