The liquids business of Transportadora de Gas del Sur (TGS), Argentina's main southern gas pipeline operator, nearly matched natural gas transportation in third-quarter operating profit. Liquids generated ARS 78.92 billion between July and September, just ARS 244 million below the ARS 79.16 billion earned by transportation. In the second quarter, measured in June pesos, transportation had contributed ARS 95.5 billion and liquids ARS 77.9 billion.
The figures come from the earnings release TGS filed on October 29 with the U.S. Securities and Exchange Commission (SEC). The company posted net income of ARS 110.5 billion in the third quarter, down from ARS 149.5 billion in the same period of 2025, on revenue of ARS 532.5 billion. Unless otherwise stated, figures are in constant pesos as of September 30, restated for inflation under IAS 29.
At the same time, the company moved fully into its construction cycle. Cash applied to investing activities reached ARS 471.1 billion, almost three times the ARS 159.3 billion of a year earlier, on higher spending on property, plant and equipment. During the quarter, TGS took on $221.4 million in new debt.
Cheaper Feed Gas Lifts Liquids Profit 21%
Operating profit in liquids rose 21% year-on-year, ARS 13.9 billion more than in the third quarter of 2025. According to the company, the improvement was mainly driven by a lower cost for the natural gas it buys for processing, ARS 17.3 billion below the prior year, and by an ARS 6.3 billion smaller charge in other operating results, partly offset by revenue that was ARS 10.9 billion lower. At the consolidated level, other operating results improved by ARS 8.16 billion, a difference TGS attributed mainly to the March 2025 flooding that hit its Cerri gas processing complex near Bahia Blanca, Buenos Aires province, Argentina's main industrial port and the hub of its petrochemical and natural gas liquids (NGL) export complex.
Segment revenue, by contrast, fell to ARS 225.6 billion from ARS 236.4 billion. Inflation restatement cut ARS 59.2 billion and lower volumes of liquefied petroleum gas (LPG) and natural gasoline sold took off another ARS 15.3 billion. On the other side, international reference prices added ARS 43.0 billion and the nominal exchange rate ARS 19.4 billion.
Production totaled 293,929 tonnes, 20,934 tonnes less than a year earlier, and volumes sold fell 3%. The segment accounted for 42% of the company's revenue, the same share as in the third quarter of 2025.
Network Reconfiguration Weighs on Transportation Revenue
Transportation, TGS's regulated business, earned ARS 24.3 billion less than a year earlier. Its revenue fell ARS 14.4 billion: tariff increases added ARS 58.4 billion, but inflation restatement subtracted ARS 51.6 billion and lower services provided another ARS 20.9 billion. The company linked that last decline to the reconfiguration of the transportation system in effect since May under Resolution 66/2026 of Argentina's Secretariat of Energy, which redefined the contractual framework for gas transportation to fit the country's new production profile, led by the Vaca Muerta formation, one of the world's largest shale plays, and under Resolution 409/2026 of ENARGAS, Argentina's gas regulator, which completed that reorganization.
Transportation costs rose ARS 11.8 billion, and firm contracts accounted for 84% of segment revenue, up from 82% a year earlier. The third business, midstream and telecommunications, which mainly comprises the services TGS provides in Vaca Muerta, billed ARS 110.4 billion, against ARS 121.9 billion a year earlier, and its operating profit fell ARS 14.9 billion.
NGL Project Nears Full Contracting as Capex Accelerates
The jump in spending on property, plant and equipment coincides with the company's two major projects. In its integrated liquids project, TGS signed new agreements with gas producers during the quarter and raised firm contracted capacity to 96% of the planned total. When it announced the final investment decision (FID) in June, the agreements approved by the board with YPF, Argentina's state-controlled oil and gas company; Pluspetrol, an Argentine independent oil and gas producer; and Chevron, the U.S. energy major, covered more than 80%, and in August CEO Oscar Sardi put the committed share at 93%.
On October 19, Economy Minister Luis Caputo announced that the Evaluation Committee had approved the entry of the company's two projects, worth more than $3.2 billion, into Argentina's Large Investment Incentive Regime (RIGI). TGS had filed the application in June, and the next step is a resolution from the Ministry of Economy.
The project, which the company estimated at $3 billion when it took the decision, includes a segregation pipeline of about 100 km, an expansion of the Tratayen plant in Neuquen province, a multiproduct pipeline to Bahia Blanca, fractionation and storage plants, and works at the Puerto Galvan marine terminal. TGS expects to bring it online in 2030.
Speaking at the CEO session of the AOG Patagonia oil and gas exhibition in Neuquen on October 21, Sardi said the RIGI approval arrived just as TGS is "right in the middle of the financing process" for the project. He also warned that a delay in the plant would constrain oil and wet gas production in the basin, because the pipelines no longer have room to keep carrying gas with such a high heating value. "Now we really are racing against the clock," he said.
The other project is the expansion of the Perito Moreno pipeline (formerly known as Néstor Kirchner), which will add 14 million cubic meters per day (MMm³/d) between Tratayen and Salliquelo, Buenos Aires province, and has a construction deadline of April 30, 2027. On October 8, TGS also asked the Secretariat of Energy to expand that pipeline by a further 4.5 MMm³/d, within the authorization for up to 6 MMm³/d granted by Energía Argentina S.A. (ENARSA), the state-owned energy company. The request is awaiting approval.
Even at that pace of construction, TGS closed September with a net cash position of ARS 310.1 billion, compared with ARS 126.9 billion at the end of 2025. Operating cash flow rose 48% to ARS 296.6 billion, on lower working capital needs and lower income tax payments.