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.