Tech companies look to Argentina’s windswept Patagonia to build massive data centers

Argentina's rugged Patagonia is drawing increasing interest from investors searching for sites for mega data centers who are enticed by the region's cool temperatures, renewable energy, shale gas and empty stretches of land. As tech giants known as hyperscalers race worldwide to build server farms and run into roadblocks amid anti-data-center campaigns, projects in initial stages in Argentina are developing without much public attention. Since Argentines have yet to be impacted by large data centers, the country lacks a backlash against the server farms as in the U.S., where critics say they strain local power grids, harm the environment and increase utility bills. Supporters say the facilities are essential for the AI boom, generate significant local tax revenue, and can be made more sustainable. The Patagonia region is at South America's southern tip, known for its jagged mountain peaks, desert landscapes and massive glaciers. The attention on Argentina comes amid a steadier macroeconomy in a country historically plagued by high inflation. Under President Javier Milei, who took office in December 2023, Argentina has attracted major oil and mining investments through the RIGI incentive regime, which provides tax breaks and regulatory stability, while strengthening ties with Washington. “Two years ago, nobody would talk about Argentina,” said Steve Sasse, vice president for Latin America at datacenterHawk, a Texas-based market intelligence group. OpenAI announced last October that it would partner with local company Sur Energy on a data center powered by clean energy costing up to $25 billion, with a capacity of up to 500 MW. In July, Argentina's communications agency said it intends to create a second fiber-optic cable landing station to make Patagonia friendlier to data centers. Argentina now has only small data centers, concentrated in Buenos Aires. It lags behind its neighbors. Amazon.com AMZN.O is moving ahead on a mega data center in Chile, while Alphabet's GOOGL.O Google constructs one in Uruguay. In May, Paraguay shared plans for a data center with backing from Taiwan. While Patagonia has energy resources and a favorable climate, infrastructure and connectivity remain hurdles. "It’s not a product looking for a buyer — someone has to build it," said Lutz, the consultant. Experts caution against conflating announcements with firm projects. “There is interest, and there are plenty of players, but the project has to get started," said Gustavo Castagnino, director of corporate affairs at Genneia [RIC:RIC:EMGSD.UL], Argentina’s leading renewable energy company. Luis Schilling, Latin America co-chair for iMasons, a U.S. nonprofit that connects digital infrastructure professionals, has postponed three times a trip for companies to tour sites in Patagonia. It is now set for February. "They would feel more comfortable if Milei was re-elected," he said. In fact, Milei has worked to court Big Tech. In May 2024, he traveled to Silicon Valley to meet with Apple's AAPL.O then-CEO, Tim Cook, as well as with chief executives Sam Altman of OpenAI, Sundar Pichai of Google and Mark Zuckerberg of Meta Platforms META.O to encourage investment, including in Patagonia. Billionaire investor Peter Thiel bought a 1% stake in Vista Energy VISTAA.MX, a leading oil producer operating in Vaca Muerta, according to an August regulatory filing. Argentina “previously wasn't really on the map,” said Martin Varsavsky, an Argentine founder of five so-called unicorns, or startups valued at more than $1 billion. “It was like planting the Argentine flag, saying, 'Here lies a country with abundant energy and excellent conditions for investment.'” Altman announced the OpenAI project 17 months later. Sur Energy co-founder Emiliano Kargieman and OpenAI did not respond to interview requests from Reuters. In August, Kargieman told Bloomberg Linea that he was working with Neuquen province to identify a site and “the ball is in OpenAI's court right now to sign the definitive contract and launch the project.” He did not know if Argentina's upcoming election was a factor: “It’s a question for OpenAI.” In Argentina's province of Neuquen, located in Patagonia, major electricity generator Pampa Energia PAMPm.BA is pushing for a data center that would be located by the company's Loma de la Lata thermal power plant. It would consume up to 500 megawatts of energy from nearby Vaca Muerta, one of the world’s largest shale gas formations, said Ruben Turienzo, the company's commercial director for electricity. Mapuche Indigenous families live in the rural area, and have historically clashed with energy companies. Pampa began studying the project, which was previously unreported, after receiving inquiries at the beginning of this year about potential data center projects. “We started to detect there was interest that was a bit firmer," said Turienzo.

Tech companies look to Argentina’s windswept Patagonia to build massive data centers

Patagonia draws interest for mega data centers

Argentina markets itself to investors under Milei

Infrastructure and connectivity remain key hurdles

Pampa Energia advances a 500 MW proposal in Neuquen

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