The U.S. Energy Information Administration (EIA) has reported that Argentina’s crude oil and natural gas production is approaching record levels, largely due to increasing output from the Vaca Muerta shale formation. This rise in production is helping to offset declines in conventional oil and gas fields. From January 2021 to September 2024, Argentina’s crude oil production grew by 50%, while natural gas production rose by 27%, bringing both fuels close to the record highs seen in the early 2000s, according to data from the country’s Energy Ministry (SESCO).
The Vaca Muerta formation, primarily located in the Neuquén province, holds significant resources, with an estimated 308 trillion cubic feet (Tcf) of technically recoverable shale gas and 16 billion barrels of shale oil and condensates. Argentina is now ranked among the top five countries globally in terms of shale oil and gas resources.
Surge in Vaca Muerta Production
Crude oil production from Vaca Muerta has surged since 2021, driven by several factors:
Increased drilling activity
Advances in hydraulic fracturing and horizontal drilling technology
Favorable oil prices
Improved infrastructure, including new oil pipelines
Supportive government policies
In September 2024, Argentina’s crude oil production reached an average of 738,000 barrels per day (bpd), marking a 15% increase from the same month in 2023. This is the highest monthly output since 2003. Of that, 58% came from the Vaca Muerta formation, according to SESCO.
Argentina’s natural gas production also reached impressive levels. From January to September 2024, the country produced an average of 5.0 billion cubic feet per day (Bcf/d), a 5.2% increase over the same period in 2023. The highest monthly production occurred in August 2024, when output peaked at 5.4 Bcf/d, the most in 21 years. The Vaca Muerta shale was responsible for more than 70% of the country’s natural gas production, rising to 74% (3.8 Bcf/d) in September 2024.
Export Growth
The surge in crude oil and natural gas production has opened new export opportunities for Argentina. From 2017 to 2023, crude oil exports grew by an average of 33% annually, rising from 30,000 bpd to 128,000 bpd. In 2023, shale crude made up about 70% of these exports, with the U.S., Brazil, and Chile as primary destinations. The completion of the Vaca Muerta Norte Oil Pipeline has facilitated these exports, particularly to Chile.
On the natural gas front, increased domestic production and new pipeline projects have reduced Argentina’s reliance on liquefied natural gas (LNG) imports. Historically, Argentina imported LNG to meet peak demand during the winter months. However, by the first nine months of 2024, LNG imports dropped by 43%, compared to the same period in 2023. Pipeline imports, primarily from Bolivia, also fell sharply by 47%, following the end of these imports in September 2024.
Argentina is focusing on expanding its natural gas export capacity, particularly to neighboring countries. Natural gas exports to Chile and Uruguay have risen notably, driven by infrastructure projects such as the Perito Francisco Pascasio Moreno gas pipeline, which began operations in 2023. This pipeline carries gas from Vaca Muerta to the provinces of Santa Fe and Buenos Aires. Exports to Chile grew by 14% in the first nine months of 2024 compared to the previous year, reaching 0.25 Bcf/d.
Expansion of Natural Gas Infrastructure
Several major infrastructure projects are helping to support the growth of natural gas production from Vaca Muerta. One of the most significant projects is the Perito Francisco Pascasio Moreno pipeline, which has an initial capacity of 0.7 Bcf/d, with plans to expand it to 1.2 Bcf/d by 2028. The Gasoducto Norte pipeline is also undergoing a flow reversal to transport gas from southern to northern Argentina. The first phase of this project began in November 2024, with full capacity expected by the first quarter of 2025. This project will facilitate natural gas exports to Chile and Brazil, meeting growing demand in these regions.
Additionally, the Argentine government has implemented policies to boost energy production and exports, including the Plan Gas.Ar and the Plan Gas IV Program, which expands natural gas export authorizations and introduces four-year export contracts, Argentina’s first multiyear contracts in two decades. In July 2024, Congress passed the Promotional Regime for Large Investment (RIGI), offering tax and customs incentives to attract more investment in energy infrastructure.
Future LNG Export Plans
Several companies are planning to build floating LNG (FLNG) infrastructure in Argentina over the next few years. Golar LNG has signed a 20-year agreement with Pan American Energy (PAE) to deploy an FLNG vessel by 2027, aiming for a production capacity of 2.45 million tons per year (tpy). Tecpetrol SA is designing an onshore plant with an initial capacity of 4 million tpy, and YPF SA, Argentina’s state-owned energy company, plans to bring an existing FLNG facility online by 2027, targeting 1 to 2 million tpy of additional export capacity.
These developments indicate a bright future for Argentina’s energy sector, driven by the growing production of crude oil and natural gas from Vaca Muerta, coupled with significant infrastructure investments and export expansion.
Related Topics:
- India to Provide LNG to Sri Lanka
- Germany to Close Major LNG Terminal in 2025
- Declining Chinese LNG Imports May Alleviate Europe’s Energy Challenges