The shale play saw an uptick in drilling activity, with an average of 40 new horizontal wells coming online monthly in the third quarter, peaking at 46 in September. However, activity slowed in the final quarter, bringing the total new wells for the year to nearly 400, marking a 20% increase from 2023. Gas infrastructure developments, including the expansion of the Perito Francisco Pascasio Moreno Gas Pipeline (previously called Nestor Kirchner Pipeline), are improving domestic supply reducing Argentina’s dependence on gas imports. With upgraded pipeline connections and increasing production, Argentina only requires LNG imports at peak winter demand, while local companies focus on future LNG export opportunities.

Argentina relies on Vaca Muerta to reduce energy imports, achieve self-sufficiency and attract foreign investment, leading to a shift in focus towards unconventional oil and gas development. YPF, the state-controlled energy company, has been central to this effort, driving production growth and accounting for nearly half of the country’s crude oil output in 2023. YPF has prioritized increasing shale production, divesting from mature conventional fields to optimize capital allocation and enhancing upstream operational efficiency as part of its long-term strategy. Additionally, the company is advancing Argentina’s LNG ambitions by partnering with Shell to develop a floating LNG project with an initial capacity of 10 Mtpa, alongside agreements with Indian companies for potential exports.

Argentina's Incentive Regime for Large Investments (RIGI), approved last year, offers tax breaks, foreign exchange benefits, and other incentives to attract investment in infrastructure, energy, and oil and gas. Projects must meet a minimum foreign currency investment of $200 million to qualify, with stable fiscal terms guaranteed for 30 years, aiming to drive billions in investments. As part of the Ley Bases regime, new measures seek to align domestic oil prices with Brent and grant operators the freedom to export, provided local demand is met first. A regulated “Criollo” barrel price remains in place for domestic sales, though recent market shifts, including Brent price declines and favorable exchange rate policies, have enabled exporters to achieve parity. The long-term impact of these regulations is yet to be fully realized.

In December, major operators including YPF, Pan American, Vista, Pampa, Chevron, Pluspetrol, and Shell confirmed their participation in the Vaca Muerta Oil Sur (VMOS) pipeline project, a 600-kilometer pipeline connecting Vaca Muerta to a new export port in Punta Colorada. Initially designed for 550,000 bpd, the pipeline has the potential to expand to 700,000 bpd, with contracted capacity already at 275,000 bpd.

With rising production, Vaca Muerta operators focus on expanding export infrastructure to prevent bottlenecks and maximize revenues. In 2024, Medanito (oil from the Neuquen basin, including Vaca Muerta) exports saw their highest level since Vaca Muerta became a major oil-producing region, rising at least 34% from 2023. Chile emerged as the dominant export destination following the OTASA pipeline’s launch in May 2023, with shipments there doubling to an average of 71,000 bpd, peaking at 94,000 bpd in September. Meanwhile, exports to Europe ceased after 2022, and shipments to the US and Brazil declined as Chile offered simpler logistics.

On the M&A side, Pan American and Golar LNG’s Southern LNG project saw new investors, with Pampa and Harbour acquiring 20% and 15% stakes, respectively, and YPF securing 15% this year. ExxonMobil and QatarEnergy exited four Vaca Muerta blocks and the Oldelval pipeline, selling to Pluspetrol, while YPF acquired ExxonMobil’s Sierra Chata assets. Lastly, GeoPark re-entered Argentina by acquiring stakes in key Vaca Muerta blocks in the Neuquen and Rio Negro provinces, signaling renewed investment interest in the country’s oil and gas sector.

Vaca Muerta's continued growth underscores its role as the backbone of Argentina’s energy sector, driving record production, expanding export opportunities, and attracting substantial investments. With key infrastructure projects like the VMOS pipeline and LNG developments advancing, alongside policy incentives such as RIGI, the region is well-positioned to enhance Argentina’s energy security and global market presence.

Authors: 

Radhika Bansal

Vice President, Upstream Research
radhika.bansal@rystadenergy.com

Andres Villarroel

Senior Analyst, Upstream Research
andres.villarroel@rystadenergy.com

(The data and/or forecasts in this column are Rystad Energy's, and the opinions are of the authors.)