Indian firm beats Argentina's Techint in $200mn Vaca Muerta pipeline tender

India's Welspun Corp has secured a contract worth just over $200mn to supply pipes for Argentina's Vaca Muerta liquefied natural gas (LNG) project, defeating local steel giant Tenaris in a contentious decision that has sparked a row between President Javier Milei and one of the country's most powerful industrialists.

The Southern Energy consortium awarded the contract to Welspun following a competitive tender for nearly 500 kilometres of pipeline infrastructure, choosing the Indian manufacturer's bid which came in approximately 40% below Tenaris's offer, according to energy sector analyst Nicolás Gandini, director of Econo Journal.

The decision marks the first time in more than 70 years that Tenaris, owned by Paolo Rocca's Techint Group and Argentina's sole domestic manufacturer of oil and gas tubes, has been excluded from a major energy project in the country, Gandini said.

Welspun prevailed over 13 other international bidders from Spain, China, Colombia, Mexico, Japan, Greece and Turkey, La Nación reported.

The pipeline will transport gas from the Vaca Muerta shale formation in Neuquén province to the coast of Río Negro, where it will be liquefied and shipped for export as part of a $15bn development being implemented under Milei's administration.

The award has sparked accusations from Techint that Welspun engaged in dumping by offering tubes manufactured with Chinese steel at below-market prices. The Techint Group is considering filing a formal dumping complaint with Argentine authorities, sources close to the company said, MDZ reported.

"With tax revenues ceded by the national state (and all Argentinians), work in India and China is financed," sources close to Rocca's group warned, referring to tax benefits the project receives under Argentina's Large Investments Incentive Regime.

According to Infobae, Milei defended the government's decision not to impose anti-dumping measures or trade barriers, launching a pointed attack on Rocca in social media posts on January 26.

"If you see 'journalists,' 'economists,' and politicians talking to you about the steel industry and the prejudices caused by opening up imports, you already know who's lining their pockets," Milei wrote, later referring to "the defence of Mr Junk of the EXPENSIVE little tubes."

Federico Sturzenegger, minister of deregulation and state transformation, supported the decision, arguing that higher input costs would reduce project profitability and ultimately harm investment, employment and exports.

"More expensive pipes mean lower project profitability, less investment, fewer jobs, and fewer exports," Sturzenegger said in a statement.

Rocca had warned in December that he would consider shutting a Tenaris plant in Valentín Alsina if pipes were imported from China or India for the Vaca Muerta project. The facility employs 420 people directly, with an estimated four additional jobs in the supply chain for each company employee.

Tenaris submitted a revised proposal to match Welspun's commercial terms "to preserve the industrial operation in the long term, even though it is not profitable for this particular business," according to a January letter Rocca sent to the Southern Energy consortium's board of directors.

The consortium comprises state oil company YPF, Pan American Energy, Pampa Energía, Britain's Harbour Energy and Norway's Golar LNG. Sources within the consortium said Welspun won by submitting the cheapest bid whilst meeting technical requirements.

Tenaris is the world's leading manufacturer of seamless and welded steel tubes, with production facilities in 17 countries and more than 26,000 employees globally.

The government maintained that even if foreign subsidies artificially lowered Welspun's prices, the cost would be borne by other countries rather than Argentina. A Casa Rosada source said: "We are not going to pay more for the pipes."