Good morning. My name is Laura, and I will be your conference operator today. At this time, I would like to welcome everyone to TGS Second Quarter 2021 Results Earnings Conference Call. TGS issued its earnings report yesterday. If you did not receive a copy via e mail, please do not hesitate to contact TGS' Investor Relations department.
Before we begin the call today, I would like to remind you that forward looking statements made during today's conference call do not account for future economic circumstances, industry conditions and the company's performance and financial results. These statements are subject to a number of risks and uncertainties. All figures included herein were prepared in accordance with the International Financial Reporting Standards and are stated in constant Argentine Pesos as of June 30, 2021, unless otherwise noted. Joining us today from TGS in Buenos Aires is Alejandro Basso, Chief Financial Officer Leandro Perez Castano, Finance Manager and Carlos Almagro, Investor Relations Officer. And now, I would like to turn this call over to Mr.
Basso. Sir, please you may begin your presentation.
Thank you. Good morning, everyone, and thank you for joining us today on this conference call to discuss the 2021 Q2 earnings and highlights for Transporta Bora de Jardensul. To begin the call today, I would like to share with you some relevant news that have occurred since our last quarterly earnings call in May. Firstly, and addressing the COVID-nineteen pandemic, the vaccination campaign in Argentina is currently being coming out at a fast pace. More than 55% of the population have received at least one dose of vaccine and more than 15% of the population have received 2 doses.
The recent mass vaccination has contributed to its restriction and is expected to contribute with a partial recovery of the economy activity during the 2nd semester. It is important to remind you that TCS continues running its operations complying with all the protocols to keep its employees and suppliers safe. Secondly, addressing the transportation tariffs on May 31, Energas officially notified TCS through a resolution that there would be no tariff adjustment since May, which confirmed what Enel Gas stated in renegotiation transitional agreement sent to TGS on April 28 and which TGS did not accept. In addition, Enel Gas has established some interim conditions until a new integral tariff revision is finished, whose deadline is December 2022. The most relevant conditions are: 1, the potential transitional tariff adjustment starting April 2022 2nd, no mandatory investments required and in the third place, the prohibition to pay dividends.
On July 5, TGS filed administrative claims to the Executive Power, the Ministry of Economy and Miner Gas through which TGS requested the implementation of the pending semi annual tariff adjustment and as it is determined in the integral tariff revision renegotiation signed in 2017, representing a 130% increase. In the case of natural gas distribution companies, General Gas increased their tariffs by around 30% starting last May, which represents approximately a 6% increase in the amount to be paid by the residential consumers and a 4% increase for small and medium sized companies. Turning to Slide 4, I will now briefly address some of the highlights in our 2021 second quarter results. To remind you, all figures presented in this quarter and comparisons made with the previous quarters are expressed in constant pesos as of June 30, 2021, following the provisions established by the IFRS for financial reporting in hyperinflationary economics. As seen on this slide, we reported a net income of DKK3.4 billion during the Q2 of 2021, which is higher than the €2,600,000,000 reported in the same quarter of 2020.
Total EBITDA decreased by €473,000,000 principally driven by €2,400,000,000 all of the natural gas transportation EBITDA, mostly related to the lack of the tariff adjustment. This was partially offset by a level increase of the liquids business EBITDA of €1,800,000,000 which is mainly due to the higher reference international prices even when the variable cost also increased. Financial results reflected a positive variation of €3,700,000,000 explained mostly by the variation of the foreign exchange rate results. Also during the quarter, income tax increased by €2,300,000,000 mainly due to the higher income tax rate, which was increased by the National Congress last June to 35 percent for total income on the excess of €50,000,000 The previous income tax rates were 30% for 2021 and 25% for 2022 and on. Moving on to Slide 5, EBITDA for natural gas transportation business decreased by €2,400,000,000 This decline is basically explained by the €2,300,000,000 revenue loss generated by the annual inflation of 50%, which was not compensated by any tariff adjustment.
Operating costs increased slightly by almost 3%. The revenues generated by the print transportation contracts were up 80% of the total transportation business revenues. The average life of these contracts is more than 10 years, allowing TGS to generate a steady flow of revenues. The lack of the tariff adjustment since April 2019 under the current inflationary context has caused a continuous deterioration in our operating margin. On Slide 6, you can see that the EBITDA from the Liquids business grew during the Q2 of 2021, increasing approximately €1,800,000,000 to almost €4,400,000,000 This significant increase of more than 70% is mostly explained by higher reference international prices, which on average more than doubled and generated additional revenues of 4,200,000,000.
In addition, higher volumes of ethane of around 35,000 metric tons contributed to higher sales of BRL1.2 billion. Higher volumes of propane by 15,000 metric tons were sold in the domestic market generating additional sales of €551,000,000 The average price of natural gas increased from $2.1 per 1,000,000 of BTU to $2.9 as a result of new reference prices in the local market, which were offered by the gas producers to the government under the Gas Plant 4 launched at the end of last year, and which started impacting TGS in May as natural gas purchase agreements with previous prices expired in April. This resulted in a higher revenue cost of €1,700,000,000 In addition, lower exports reduced revenues by almost €1,700,000,000 due to lower volumes of Urbane by 24,000 tonnes and natural gasoline by 10,000 tonnes. Turning to Slide 7, EBITDA for other services increased by 15%, mainly due to higher revenues of €305,000,000 generated by midstream services. Most of these higher midstream sales were generated by the services rendered with our gathering pipeline and conditional plant located in Vaca Muerta.
On Slide 8, we can see that financial results recorded a positive variation of 3,700,000,000. This variation was mainly explained by the reduction of the foreign exchange rate loss of 2,600,000,000, which was attributable to a lower increase of the exchange rate, 4% in Q2 20 21 versus 9% same quarter 2020 and a lower dollar denominated net liability balance. In addition, the inflation exposure generated a higher gain of MXN 427 1,000,000. Financial asset income increased by MXN353 1,000,000 due to higher financial investment denominated in pesos and higher yields. An evaluation loss of €273,000,000 was generated by financial derivative instruments in the Q2 of last year.
Finally, turning to cash flow on Slide 9. Our cash position in real terms remains stable at the level around ARS30 1,000,000,000 equivalent to more than $300,000,000 EBITDA generated in the 2nd quarter amounted to €8,200,000,000 out of which 56 percent was generated by the non regulated business. CapEx amounted to €1,600,000,000 and our working capital increased by €1,400,000,000 We also purchased $2,000,000 of our own debt, paid interest for 1,600,000,000 and income tax for 1,800,000,000. Our cash position remains robust with no debt amortization in the short term. We expect to continue generating positive free cash flow in the near future despite the continuous deterioration of the natural gas transportation EBITDA.
This concludes our presentation. I will now turn the call back to the operator who will open the floor for questions. Thank you.
At this time, we will be conducting a question and answer session. You. Our first question comes from the line of Konstantinos Papalios with Fuente. You may proceed with your question.
Thank you very much. Have a good day and congratulations on your results. I would like to refer to the liquids unit, business unit. I'd like to know why was there so much liquids in the internal market when production was almost in the same level as in the Q1? And my second question is regarding the prices for the procurement of the natural gas, what should we expect for the next quarters?
Have you made any contracts? Could you tell us about the prices of these contracts and the maturities? Thank you. Thank you very much.
Hi, Konstantinos. How are you doing? Well, as regard the liquids in the domestic market, you know that this quarter we have more demand from the domestic markets than the previous year. You know that last year we suffered a pandemic here in Argentina, so consumption was lower. And at the same time, as part of these liquids and especially the butane has now increased in have not increased in their prices in the regulated price.
So the demand has been increasing also. Okay? And the second question regarding the contracts, we were able to sign all the contracts that we need for the next year and also we have a couple of contracts for 3 years, 2 years more than this year. Fantastic. The prices are below the reference gas plant, Argentina gas plant price.
Okay?
Thank you. Thank you very much. And again, congratulations on your results.
Thank you. You're welcome.
Our next question comes from the line of Martin Arante with Balan Capital. You may proceed with your question.
Hello. Martin and Sergio from Bannan Capital. First of all, thank you for the materials. I have two questions. The first one also about your liquid business.
As you mentioned, prices have been rising this year. I wanted to know what do you expect for the rest of 2021? And in the local market, what is the price of the regulated ton of butane today? And what is and if you expect an increase this year? And my second question is about Pangas Cuatro.
Pangas Cuatro volumes are growing and unconventional production is rising. Any expectations of the government making a decision on the new trunk pipe upgrade in 2021 or maybe after the election? Thanks.
Okay, Martin. How are you doing? As regards to the liquids, the gas price, we expect lower prices for the spring and summer. You know that this is a seasonal business in Argentina. So you have higher prices for the winter season.
So the next quarter or the current quarter, it's winter, July, August September. So prices should be higher than the previous quarter. And then it's going to go down for the spring and summer season, okay? As regarding the regulated prices, well, in the propane case, the prices are quite similar to the export prices, okay? It's not it has a maximum price, which is the export parity.
And as regarding the propane, it's around $120 per ton. So it's 1 quarter that it should be. Okay. Regarding the plant gas cuatro, well, we are seeing higher volumes than the previous year. The volumes are growing.
So we are quite we are happy with what is happening with the Emplana Cuatro. Expectation for next year, it will depend on the government fulfilling its obligations under this plan. And so if it happens, we are going to have additional volumes maybe for next year and on.
And as a follow-up question, do you have any other non regulated projects in Vaca Muerta on-site?
Well, we are working on the expansion of our analyzing projects for expanding our conditioning plant in Cartagena in Vaca Muerta. And you know that we have a project to build processing plant there. Currently, we're working on it, but step by step, okay, as we are analyzing how the gas demand is moving in the future.
Okay. Thank you.
You're welcome, Martin.
Ladies and gentlemen, we have reached the end of today's question and answer session. I would like to turn this call back over to Mr. Alejandro Basso for closing remarks.
Okay. Thank you for participating in this year's Q2 2021 conference call. We look forward to speaking with you again when we release our Q3 2021 results. However, if you have any questions in the meantime, please do not hesitate to contact our Investor Relations department with any questions. Have a good day.
Thank you for joining us today. This concludes today's conference. You may disconnect your lines at this time.