Transportadora De Gas Sa Ord B NYSE: TGS reported sharply higher second-quarter profit as growth in its liquids business, improved financial results and higher natural-gas transportation earnings offset inflationary and operating pressures. The company also highlighted a final investment decision for a $3 billion natural gas liquids, or NGL, project, with commercial agreements executed for more than 90% of its total capacity.
Chief Financial Officer Alejandro Basso said the NGL project is expected to require about 45 months of construction, with commercial operations targeted for March 2030. The company has requested approval for the project under Argentina’s Regime for Incentive of Large Investments, known as RIGI.
The project includes a gathering pipeline in Vaca Muerta, a processing plant in Tratayén, a 475-kilometer polyduct, a fractionation plant in Cerri and storage facilities in Puerto Galván.
Second-Quarter Earnings Rise
TGS reported net income of ARS 133 billion for the second quarter of 2026, up from ARS 53.8 billion in the year-earlier period, with figures stated in constant Argentine pesos as of June 30, 2026.
Basso attributed the increase primarily to a ARS 60.2 billion positive change in financial results and a ARS 48.4 billion increase in liquids EBITDA. Natural-gas transportation EBITDA also increased by ARS 12.3 billion.
EBITDA for the natural gas and oil business totaled ARS 132 billion, compared with nearly ARS 120 billion a year earlier. Tariff increases lifted revenue by ARS 60.2 billion, exceeding a ARS 48.6 billion negative inflation effect, according to Basso.
Comparisons were also aided by two events in the second quarter of 2025: an ARS 11.2 billion trade receivable write-off and damage to transportation assets from a March 2025 climate event. The climate-related disruption accounted for an ARS 8 billion positive EBITDA variation in the 2026 comparison, Basso said.
However, transportation-contract revenue declined by ARS 9.3 billion following a reconfiguration of Argentina’s gas transportation system that took effect in May. Basso said the shift reflects growing gas supply from Vaca Muerta replacing volumes historically sourced from Bolivia, northern Argentina and southern fields. He said future small monthly tariff adjustments are expected to partially offset the initial revenue impact.
Liquids Volumes and Prices Drive EBITDA
Liquids segment EBITDA rose to ARS 82.3 billion from ARS 33.9 billion a year earlier. Sales volumes increased to 330,000 metric tons from 211,000 metric tons in the second quarter of 2025.
Basso said the prior-year comparison reflected lower production and sales after flooding on March 7, 2025 caused a processing-plant shutdown. The facility resumed operations in mid-April 2025 at a reduced production level and returned to normal operations by early May.
Higher volumes contributed ARS 46.7 billion of EBITDA growth, while higher international reference prices, which Basso linked to geopolitical conflict in the Middle East, added ARS 23.2 billion. Those gains were partly offset by the absence of an ARS 8.5 billion take-or-pay annual compensation collected in the prior-year period, a ARS 7.4 billion negative monetary effect, lower retained prices and higher natural-gas costs.
Midstream and other services EBITDA declined modestly to ARS 64.1 billion from ARS 69.3 billion. Vaca Muerta midstream revenue rose by ARS 13.2 billion as average billed transported gas volumes climbed to 35 million cubic meters per day from 30 million cubic meters per day, while gas-conditioning volumes increased to 30 million cubic meters per day from 27 million cubic meters per day. Higher revenue was more than offset by inflation-related monetary effects and increased operating expenses.
Capital Spending, Expansion and Financing
TGS ended the quarter with cash of ARS 2.206 trillion, equivalent to about $1.5 billion at official exchange rates, after its cash position increased by ARS 274 billion in real terms during the quarter. Quarterly EBITDA generation was ARS 278.4 billion, with 53% generated by non-regulated businesses even after the full normalization of the natural-gas transportation segment.
Capital expenditures totaled ARS 165 billion, largely driven by pipeline expansion investments. Working capital decreased by ARS 186 billion, primarily because customers paid the first installment of prepayments for 5 million cubic meters per day of incremental firm transportation capacity.
Regarding the ongoing Perito Moreno pipeline and TGS transportation-system expansion, Basso said TGS had invested about $180 million as of June 30 and expected roughly $600 million of spending through May 2027. The Ministry of Economy approved the Perito Moreno pipeline expansion for inclusion in RIGI in May, which Basso said will provide tax benefits.
The company allocated 5 million cubic meters per day of capacity under fully prepaid contracts in the first round of its open season. In June, it received bids exceeding 100 million cubic meters per day for the remaining 9 million cubic meters per day of capacity and submitted its allocation proposal to regulators for approval.
For the $3 billion NGL project, management expects approximately $500 million of capital spending in 2026, $800 million in 2027, $1 billion in 2028, $600 million in 2029 and the remainder in the first quarter of 2030. TGS has secured agreements with banks for about $300 million of import financing for the first year and is working with lenders to finance 60% of a $2 billion portion of the project.
Basso said the company expects net debt to EBITDA to remain below 3 times during the investment phase, potentially peaking in 2028 or 2029. He also said TGS may consider adding a partner to the NGL project depending on business opportunities and market conditions.
About Transportadora De Gas Sa Ord B (NYSE:TGS)
Transportadora de Gas del Sur SA NYSE: TGS is an Argentina‐based midstream energy company principally engaged in the transportation, storage and processing of natural gas. Established in 1992 following the privatization of the state‐owned gas utility, TGS operates one of the country's largest pipeline networks, carrying gas from production basins in the Neuquén and Golfo San Jorge regions to major consumption markets in Buenos Aires and beyond. The company's infrastructure supports both domestic supply and export volumes bound for neighboring countries.
In addition to its core pipeline business, TGS maintains a significant gas processing division that extracts natural gas liquids (NGL) and produces liquefied petroleum gas (LPG) and other by‐products.
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