Argentina’s unconventional oil and gas sector is maturing with significant production growth driven by Vaca Muerta Shale. Improvements are attributed to government reforms that enhance investment appeal, despite challenges like macroeconomic weaknesses and political risks. Production is set to reach new highs with forecasts of 1 million barrels per day and increasing unconventional gas output.
Argentina’s unconventional oil and gas sector has begun a new phase of maturity, marked by accelerating production and rising asset valuations. The Vaca Muerta Shale is leading this development, reflecting the growth trajectory reminiscent of early US shale expansion. Argentina is implementing government reforms to improve its investment landscape as the shale sector reaches significant milestones in upstream, midstream, and corporate investments.
Despite its advancements, Argentina faces challenges that hinder its shale industry compared to the US, such as the absence of private land ownership and an underdeveloped oil-field services sector. Macroeconomic vulnerabilities and political risks, particularly following the renationalization of YPF in 2012, have deterred many energy companies from making investments in the sector.
However, companies like YPF, alongside major oil firms and independent players, have continued to develop the Vaca Muerta region. This commitment resulted in record production levels of 447,000 barrels per day by December 2024, reflecting a 26% year-on-year increase. Projections now indicate that production could reach 1 million barrels per day by the end of the decade. Additionally, unconventional gas production rose to 76.2 million cubic meters per day, marking a 13% increase from the previous year.
Argentina’s shale sector is evolving, overcoming historical challenges while achieving significant production increases. Entering a mature stage similar to that of the US shale boom, the sector aims for continued growth facilitated by government reforms. Despite existing hurdles, such as political risks and lacking infrastructure, the production outcomes in both oil and gas indicate a positive trajectory for the sector’s future.
Original Source: www.energyintel.com
