Argentina’s Shale Oil Reserves Represent an Opportunity for Investors Worldwide


Argentina’s hydrocarbon reserves are substantial, but their development has been adversely affected by politics. The country’s economy swings like a pendulum, from loose policies to consensus liberalization and back again. However, since the country’s president took office in 2015, he has reversed his predecessor’s policies and attempted to use free-market measures to boost the economy. Argentina is estimated to have over 27 billion barrels of shale oil reserves, which makes it the fourth-largest reserve in the world.

Vaca Muerta Takes the Spotlight

The Vaca Muerta formation has 308 trillion cubic feet of accessible shale gas and over 16 billion barrels of oil. The shale spans four provinces, and it’s twice the size of Eagle Ford’s shale. Vaca Muerta puts out about 50,000 barrels a day, which is expected to double by next year.

Government Regulation Brings Higher Consumer Pricing

While America’s consumers are enjoying low gas prices, Argentina’s consumers are funding the country’s oil industry. As prices are regulated by the government in an attempt to protect consumers from market shifts, it has the opposite effect. Consumers pay a premium on WTI and Brent crude. In 2016, the per-barrel price was set at $67.50, with a per-gallon gasoline price of almost $7.50.

More Openings for Foreign Investments

YPF’s recent nationalization has opened the country’s doors to foreign investors, making its oil industry a bigger attraction. Chevron cut Vaca Muerta drilling costs by 20% during the last part of 2015. Much of the savings came from the discovery of a rich sand deposit, which allowed YPF to stop using imported sand. In hydraulic fracturing (fracking), sand is a crucial ingredient in the shale oil well completion process. With today’s low prices and Argentina’s heavily regulated industry and rich oil and gas reserves, the country is an attractive prospect for foreign oil companies.

Although the country of Argentina has become a lucrative investment, the Vaca Muerta region is mostly untapped. It’s estimated that YPF will need about $200 billion to exploit the area to its full potential. Vaca Muerta’s geological aspects are just part of the equation. Recent governmental shifts, news from here, and economic policy changes have made the country’s climate more favorable for oil investors.

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