Argentina Virtual Oil & Gas Roundtable

The drastic fall in international oil prices affected hydrocarbon producing companies in all their operations around the world, including Argentina. The situation was aggravated by the onset and advance of COVID-19, for which Argentina declared a health emergency earlier this year and imposed preventive and mandatory social isolation and lockdown measures.

This situation led to a readjustment of the industry’s work plans, while the quarantine caused a sharp drop in sales, affected exports, and had an impact on the local hydrocarbon market. Currently, the hydrocarbon activity in Argentina is slowly recovering.

In recent years, the country began with the exploitation of its unconventional resources, located mainly in the ‘Vaca Muerta’ formation, considered as a world-class resource. Although more than US $ 20 billion has been invested to date and more than 1,000 wells have been drilled at Vaca Muerta, less than 5% of the acreage is in the development stage. This means that its potential is very great in view of the expectation of exceeding the needs of local supply and, therefore, opening the possibility to the export market.

In the current Argentine situation, it is necessary for industry, politics and the labor sector to be able to align themselves and develop the resource to its fullest potential and thereby create the environment to facilitate the arrival of more investment, more work and more energy, with the consequent positive impact on the country’s trade balance. Reaching the potential of Vaca Muerta will be possible through export and its insertion in the world market.

To meet this objective, Argentina has to achieve adequate productivity, achieve competitiveness in the entire energy chain comparable to the rest of the world, and develop a level of midstream infrastructure, efficient services and logistics that accompany and stimulate growth. If these goals are achieved, Argentina may play a relevant role in the export of hydrocarbons, including LNG.

But, in the current environment it is ever-more crucial to count on a stable and predictable regulatory framework that allows access to financing and brings long-term investments. In this sense, public policies that promote activity, such as the Gas Plan, will be key to increasing production and reducing imports.