Transportadora de Gas del Sur is no longer only Argentina's dominant regulated gas pipe. The second-quarter print and the June board decision on the integrated liquids project recast the franchise as a Vaca Muerta evacuation platform that still collects peso tariffs on the trunk system. Liquids now contribute the largest slice of revenue, and the board has committed the company to the largest natural-gas-liquids build in Argentine history, with YPF, Pluspetrol, and Chevron already signed as counterparties. That is a different equity than the frozen-tariff utility of the prior decade. The market is being asked to underwrite a multi-year construction cycle before the first incremental export cargo leaves Bahia Blanca.
The tension sits in the regulated pipe, which is still losing ground in real terms even after the five-year tariff review and monthly indexation. Transport revenue declined in constant currency because the granted increases did not cover the inflation restatement. Liquids revenue converted to about $161 million in the quarter. That gain is real volume recovery after last year's Cerri Complex weather shutdown, not only a price story, and it is also the comparison that fades first. Financial results flattered reported net income as mark-to-market gains on financial assets offset a still-negative foreign-exchange and interest stack on dollar notes. The regulated franchise has a longer license and a published monthly formula. It has not yet proven that the formula keeps required revenue whole in a high-inflation peso.
Cash generation was strong enough that the company skipped the large cash dividend paid a year earlier and kept assembling a war chest of cash and financial assets. Net financial debt still rose as placements and Perito Moreno spending absorbed the operating inflow. Converted at the official mid-year rate, reported net debt is about $335 million. Management described cash and investments on the August call as near $2 billion. The next several quarters resolve whether liquids volumes hold after the weather-base effect fades, and whether liquids-project financing closes on terms that keep leverage inside the bond ceiling while the peso tariff path actually recovers in real terms.