Patagonia Data Hub Push Targets 500MW AI Facilities in $1.4B–$25B Projects

Investor interest is surging in large-scale data center development across Argentina’s Patagonia region, driven by cold ambient temperatures, abundant renewable energy sources, access to Vaca Muerta shale gas, and vast tracts of available land. Global technology companies are racing to build infrastructure to power artificial intelligence workloads, according to Reuters.

UN Warns AI Poses Existential Risk to Humanity

The United Nations has stated that artificial intelligence represents an existential threat to humanity. In Argentina, several data center initiatives are progressing in early stages outside public scrutiny. Unlike in the United States—where opposition has emerged over grid strain, environmental impact, and rising utility bills—there has been no broad-based public backlash against such facilities in Argentina. Supporters argue the centers are essential to meet growing AI demand, generate local tax revenue, and can operate sustainably.

Newquén Province Emerges as Core Development Zone

In Newquén province, within Patagonia, Pampa Energía is developing a data center near its Loma de la Lata thermal power plant. The facility is designed for up to 500 megawatts of power consumption and will draw gas from the nearby Vaca Muerta field—one of the world’s largest shale gas reserves—according to Robin Torienco, the company’s commercial director for electricity.

Pampa Energía began studying the project after receiving preliminary inquiries about potential data center developments early this year. The company aims to secure initial agreements with investors by the end of 2026. Investors have expressed interest in launching a pilot phase ranging between 20 and 40 megawatts before scaling up. Estimated infrastructure costs to deliver 500 megawatts of electricity stand at approximately $900 million.

Newquén offers a cold climate that reduces cooling expenses, alongside access to hydroelectric power and gas from Vaca Muerta. Provincial authorities are pursuing the creation of a dedicated data center cluster, hoping that operationalizing the first facility will mitigate concerns and perceived risks associated with these projects.

U.S. Green Data Center Firm Enters Negotiations

Flex Domus, a U.S.-based green data center developer, is holding discussions to identify investors for a Newquén-based project. Its initial phase targets 120 megawatts and carries an estimated cost of $1.4 billion. Like other proposed facilities, it would rely on energy from Vaca Muerta.

Economic Reforms and Regulatory Incentives Accelerate Investment

These developments coincide with improved economic stability in Argentina following years of high inflation. The RIGI incentive regime—offering tax exemptions and regulatory certainty—has helped attract substantial investment into the oil and mining sectors, and now extends to digital infrastructure.

OpenAI, Argentine Regulator Signal Strategic Expansion

In October last year, OpenAI announced a partnership with local firm Sur Energy to study building a clean-energy-powered data center in Argentina, with a projected cost of up to $25 billion and capacity of up to 500 megawatts. In July, Argentina’s National Communications Agency declared plans to construct a second fiber-optic submarine cable landing station—aimed at enhancing Patagonia’s suitability for data centers.

Argentina currently hosts only small data centers, concentrated in Buenos Aires. Neighboring countries are moving ahead more rapidly: Amazon is advancing a major data center project in Chile; Alphabet is constructing one in Uruguay; and Paraguay has announced plans for a data center backed by Taiwan.

Despite advantages in energy supply and climate, weak infrastructure and connectivity remain key obstacles to Patagonia’s data center ambitions. Experts caution against conflating announcements with confirmed projects, stressing that interest alone is insufficient—and that actual construction and clear capital commitments are required for realization.