Vaca Muerta's oil and gas boom signals Argentina’s pivot towards LNG exports

Argentina's Vaca Muerta shale play posted significant first-quarter gains in 2025, building on last year's strong performance, with oil output surging 26% and gas production rising 16% year-on-year, according to Rystad Energy estimates. This growth is shifting Argentina away from its historical dependence on gas imports, pushing the nation closer to energy self-sufficiency. Furthermore, with the help of investment incentives for infrastructure and storage projects, Argentina is looking toward the potential export and monetization of its gas reserves in the future.

Oil production from Vaca Muerta surpassed 447,000 barrels per day (bpd) in March, up from 354,000 bpd in the same period last year, led by flagship state-owned operator YPF and supported by local independents such as Vista Energy, Pluspetrol and Phoenix Global Resources. While oil production remains strong, the basin is showing signs of slowing, particularly in drilling activity. The number of new oil wells increased only marginally, with 76 wells brought online in the fourth quarter of last year and 79 in the first quarter of this year. This slowdown is partly due to saturated takeaway capacity, a constraint expected to ease once the Oldelval Duplicar expansion begins operations in April.

Vaca Muerta’s strong oil gains are no surprise anymore as its track record speaks for itself. However, what we’re seeing now is that gas is stealing the spotlight. Dry gas production hit 2.1 billion cubic feet per day (Bcfd) in the first quarter of 2025, rising 13% quarter-on-quarter and 16% year-on-year. These strong figures are positioning Argentina on the global stage. To leverage this momentum, the country is actively pursuing a bold, multi-phase national LNG export strategy, meaning Argentina could soon become a pivotal player in global gas supply, significantly reshaping markets and energy geopolitics,

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A cornerstone of Argentina's liquefied natural gas (LNG) export ambitions, driven by the steady and reliable gains from Vaca Muerta, is the Southern Energy LNG project. This initiative will harness two floating LNG (FLNG) vessels, the Hilli Episeyo and MK II, both supplied by Golar LNG. These units will be strategically positioned off the coast of Rio Negro province, collectively offering an export capacity of 6 million tonnes per annum (Mtpa) for the country. A final investment decision (FID) for MK II is anticipated by the third quarter of 2025, with first production from Hilli Episeyo slated for late 2027 and MK II projected to come online by the end of 2028.

In a parallel national effort to unlock LNG export potential, YPF is spearheading additional large-scale developments, conceptualized as a broader, phased project. The second phase, ARGFLNG 2, is a partnership with Shell (which joined in late 2024) and is expected to achieve a capacity of 10 Mtpa. Following this, the third phase, ARGFLNG 3, with Eni as a potential strategic partner, could contribute an additional 12 Mtpa. While each phase features distinct partners and capacities, stakeholders such as YPF increasingly view them as integral components of a unified LNG export vision. Analysis from Rystad Energy points to these FLNG developments reaching full capacity by the late 2030s.

Complementing these LNG endeavors, another pivotal enabler for long-term export growth is the Vaca Muerta Oil Sur (VMOS) pipeline project. Slated to commence operations in 2027, VMOS will establish a direct link between the Neuquen Basin and the Atlantic Coast via Punta Colorada port. This new corridor is set to alleviate inland bottlenecks and enhance export logistics, significantly reinforcing Vaca Muerta's long-term viability as a global energy hub.

In addition to Argentina’s LNG ambitions, the shale play continues to attract strategic investments, with the first quarter of 2025 marking another relevant period for upstream merger and acquisition activity, now accounting for 43% of total Latin American upstream deal value in the first quarter of 2025. Beyond deal-making, strategic positioning continues to evolve in Vaca Muerta. In a notable reversal, Norwegian energy major Equinor has reconsidered its earlier decision to exit the shale play and will now remain in the region, with the end of monetary restrictions, along with improving infrastructure and export viability, pushing the company to reassess its stance. A shift in Equinor’s stance has marked something of a turning point, reaffirming international confidence in Argentina’s shale resurgence.

Contacts 
Radhika Bansal
Vice President, Upstream Research
Phone: +47 24 00 42 00
radhika.bansal@rystadenergy.com

Vadranam Sai Krishna
Analyst, Upstream Research
Phone: +91 97 42 06 16 16
vadranam.krishna@rystadenergy.com

Julia Dualibi Ameijeira
Analyst, Upstream Research
Phone: +55 219 849 321 40
julia.ameijeira@rystadenergy.com

Kartik Selvaraju
Media Relations Manager 
Phone: +65 8779 4619
kartik.selvaraju@rystadenergy.com 

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