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  • Felix Tsourakis

Argentina's oil, gas and energy industry: Everything you need to know in 2019

Updated: Apr 30, 2019

Argentina is one of the fastest developing countries in the oil & gas industry globally, gathering increasing attention from producers and international investors. They are South America’s leading unconventional oil & gas producer, possessing the highest hydrocarbon potential in the region, in tandem with countless attractive exploration opportunities.

Argentina has taken active steps in recent years to ensure its optimal relationship with existing partners and the realization of the country’s immense hydrocarbon potential.

What makes Argentina so attractive to IOCs?

Argentina is garnering a reputation for becoming the most attractive South America oil & gas market for a unique set of important reasons:

  • Large unconventional hydrocarbons deposits, with its shale reserves ranking among the three largest in the world

  • Immense exploration potential with vast deposits of gas, totaling 350 bcm (13.4 tcf), with output standing at 37.1 bcm (1.31 tcf)

  • Argentina possesses the fourth-largest technically recoverable reserves of shale oil globally at 27 billion barrels

  • Rapidly developing oil industry, with Argentina possessing the strongest unconventional potential in the region

  • Great geographical location in South America with several onshore and offshore blocks available in prominent locations

  • Agencia Argentina de Inversiones y Comercio Internacional’s ethic of treating investing companies as partners and maintaining excellent relationships

  • The Argentina - Chile Pipeline is expanding, making Argentina a rapidly growing gas supplier, soon to become Latin America’s energy node

  • Large investments in the oil & gas sector, with early adoption of new technologies, upgraded facilities and techniques to facilitate unconventional exploration and production

Investing in Argentina

When a company wants to benefit from Argentina’s significant resources, Agencia Argentina de Inversiones y Comercio Internacional is the optimal point of contact, as they are in charge of offering assistance and advice to companies that want to invest, export and grow in the country.

They connect local and international investors, detecting opportunities and promoting the hydrocarbons sector. They assist investors in their landing processes in the country by providing key information to develop their oil & gas businesses, simplifying processes, eliminating bureaucratic obstacles, and acting as a bridge with different areas of the State to make this path more efficient.

Having an overview of the entire country, they work together with government agencies, to make sure international investors make the most out of their venture.

Book a meeting with Dr. Erico Spinadel, President of Agencia Argentina de Inversiones y Comercio Internacional, and find the best way to invest in Argentina this July.

Vaca Muerta: An Oil & Gas Shale Giant

The Vaca Muerta Formation, located in the Neuquen Basin in northern Patagonia is a formation containing major shale oil & shale gas deposits, discovered in 2010 by YPF.

YPF completed the drilling of the first ever shale gas well in Argentina in July 2010. By 2012, 31 wells had been completed, with another 20 in progress, extending the Vaca Muerta production area to a minimum of 300 square kilometers.

Vaca Muerta, Offshore Exploration, Argentina Oil & Gas Summit, YPF, Qatar Exploration, IN-VR, IN-VR Oil & Gas

Vaca Muerta is the main non-conventional hydrocarbon formation in Argentina. The formation occupies an area of 36,000 km2, with resources estimated at 16 billion barrels of oil and 308 cubic feet of gas. The shale play is driving innovation through the commercial production of shale oil and gas, with many operators joining to benefit from this massive opportunity.

Division of blocks

Vaca Muerta is giant, and as such, it has been divided to several different exploration and production blocks, to ensure the optimal exploitation of the formation:

  • Chevron and YPF are developing the Loma La Lata Norte and Loma Campana fields in the General Enrique Mosconi concession,

  • Petrobras and Total are developing the Rincon de Aranda concession,

  • Petrogas, ExxonMobil and Gas y Petroleo del Neuquen (GPN) are developing the Los Toldos blocks,

  • Shell Medanito and Gas y Petroleo del Neuquen are operating on the Aguila Mora and Sierras Blancas

  • Wintershall and GPN are developing the Aguada Federal block,

  • Wintershall is the sole operator of the Bandurria Norte,

  • Pan American Energy is the sole operator of Bandurria Centro,

  • YPF is the sole operator of the Bandurria Surm block

  • ExxonMobil and GPN are the operators of the Bajo del Choique and La Invernada blocks

The influx of companies investing in Vaca Muerta is a testament to Argentina’s vast hydrocarbons potential, its excellent export-oriented location and rapidly developing industry.

The Argentinian oil & gas industry is growing as new oil & gas operators enter the market. The opportunities for service providers are countless: meet Argentina’s top oil & gas producers on 10 July 2019 at the official Argentina Oil & Gas Summit.

Developing Vaca Muerta: A multi-billion dollar project

The Vaca Muerta shale formation possesses world-class unconventional oil and gas resources, competing with the best formations in the world, even the Texas Permian basin.

Vaca Muerta produces 160,000 barrels of oil daily, with the potential to grow to 900,000 within 5 years, through $4 billion in investments annually. More than 560 frac operations were completed last year, with new contracts on the way for production, transport and selling.

YPF, Argentina’s national oil company is investing $4 to $5 billion annually to boost oil and gas production within the next 3 years, planning to increase production at a 7% rate per year.

YPF aims to invest a further $3.6 billion on new infrastructure for Vaca Muerta to help accomplish its goal of drilling 1,700 wells by 2023, quadrupling shale gas production and increasing crude oil production sevenfold.

At the same time, Argentina announced construction contracts of up to $1.8 Billion for gas pipelines linking Vaca Muerta with Buenos Aires, aiming to move 40 million cu m/day of gas, more than half of Vaca Muerta’s current gas production. This move shows the speed with which the government of Argentina moves to capitalise its rapid growth and investment potential, fostering countless new opportunities for investors, operators and service providers.

Join the official Argentina Oil & Gas Summit and find out how to best operate in Argentina first-hand by the Secretariat of Energy and the Argentinian Agency of Investments and International Trade. Meet YPF and all major operators on 10-11 July 2019.

Upstream Exploration: A new wave of opportunities in Argentina

Vaca Muerta, Offshore Exploration, Argentina Oil & Gas Summit, YPF, Qatar Exploration, IN-VR, IN-VR Oil & Gas

With onshore exploration proceeding optimally in onshore Argentina, the government turned to the most logical next step, opening its vast offshore acreage for exploration and production in the country’s first offshore bid round.

ExxonMobil and Qatar Petroleum were awarded three exploration blocks on 16 April 2019, totalling 2.6 million net acres. ExxonMobil will operate the blocks with 70% working interest, while the remaining 30% will be held by an affiliate of Qatar Petroleum.

ExxonMobil will start 3-D seismic data acquisition as soon as the Argentinian Secretariat of Energy issues a resolution confirming the public tender results.

Argentina-Chile Pipeline: The road to becoming a major gas exporter

On October 2018, Argentina started exporting natural gas to Chile through the 914-km long Argentina-Chile pipeline. During summer months, Argentina exported 5 million cubic meters a day, as lower local demand allowed it to focus more resources on exporting.

Following its recent exporting success, the Argentinian government authorised YPF to begin exporting 500,000 cubic metres and Total to export 1.5 million cubic metres daily to Chile, starting on March 2019.

As the past year has proved, Argentina possesses excellent potential to become the largest exporter of gas in South America, aided by its excellent geographical position, and vast shale gas reserves, which place it second globally.

Argentina’s Energy Industry: an emerging colossus

As renewable energy is becoming more cost-effective and widespread, global renewable

energy production has increased by 8% over the past 10 years. Latin America is attracting ever-increasing investments, creating new opportunities and projects.

Latin America is a world leader on renewable energy, as roughly 25% of energy comes from renewable sources, compared to the 13% global renewable supply average.

Bioenergy and hydropower are the main sources of renewable energy for Latin America, with wind power and solar energy being on the rise, as the production becomes cheaper and cheaper with recent leaps in technology.

Argentina is rapidly becoming an attractive recipient of investments for renewable energy projects, as its excellent environmental conditions and legal framework allow the country to take advantage of the complementary nature in generation patterns of renewable energy sources, promoting a diversified energy mixture.

Argentina is creating an attractive environment for renewable energy investments. The Secretariat of Energy launched an innovative renewable energy bidding program called RenovAr, aiming to produce 20% of Argentina's electricity from renewable sources by 2025, with the intermediate target of 16% by 2021. Argentina’s renewable energies industry has attracted more than 15 billion dollars in investments over 7 years, with more than 120 new projects in operation or under construction. Within the past few years, 197 projects were awarded, opening the way for hundreds more.

The time to enter the Argentinian renewables market is now as it is growing to reach this potential.

Grid reinforcement will be the deciding factor

With 80% of Argentina using local grids, the opportunity for energy grid projects and consulting is higher than ever, as power generation from renewables and shale gas are increasing exponentially, requiring constant grid upgrades and creating major grid unification project opportunities.

Make the most out of the new opportunities and incentives at the official Argentina Oil & Gas Summit.

Find out how to best operate in Argentina first-hand by the Secretariat of Energy and the Argentinian Agency of Investments and International Trade. Meet YPF and all major operators on 10-11 July 2019.

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