HOUSTON, TEXAS (Pietro D. Pitts, Energy Analytics Institute, 15.Jan.2025) — For energy investors pondering Argentina’s massive Vaca Muerta shale play potential and other opportunity sets, just brace yourself for president Javier Milei’s catchphrase: “¡Viva la libertad, carajo!” or “Long live freedom, damn it!”
Oh yeah, then there’s a little adjustment to his hair style. Regardless to the latter, Milei continues with his plans around reforming Argentina’s economy.
In his first year as president of the South American country, Milei has brought down inflation from 25% per month to 2.4% and reversed the freefall of the country’s currency, the peso, which contributed to Argentina posting a fiscal surplus for the first time in 15 years.
And, despite falling incomes caused by Milei’s reforms, the right-wing libertarian maintains an approval rating that exceeds 50%, the third highest among the world’s democratic leaders, according to data from The Genesis Prize Foundation.
Most notably, the “S&P Merval Index,” which tracks the performance of the largest publicly traded companies listed on the Buenos Aires Stock Exchange, boasted a return of 173% in 2024. This compares to Brazil’s stock market, which fell 7% in 2024 and Mexico’s stock market, which fell 11% in 2024. Of note, the S&P 500 rose around 27% in 2024.
Some in Argentina might t be inclined to say “Long live freedom, damn it!” if things stay this way or improve.
Analysts covering Argentina tell Energy Analytics Institute (EAI) that it will be crucial to see if Milei can maintain the positive momentum that he saw in his first year as president of the Southern Cone country that has long suffered from runaway inflation, currency controls and an undervalued currency. But, not everybody in Argentina is happily dancing Tango.
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Milei bets big on the Vaca Muerta
The Vaca Muerta alone has technically recoverable shale resources ranking among the world’s largest — 308 trillion cubic feet (Tcf) of gas and 16.2 Bn bbls of oil. These resources could easily anchor Argentina’s efforts to mature into a regional, if not, global energy exporting powerhouse.
RELATED: Argentina’s Vaca Muerta: A Game-Changer in the Making
However, to achieve such success, Argentina will have to navigate headwinds spanning from infrastructure bottlenecks and rig shortages to political uncertainties and financial hurdles.
In 1 year, Milei has taken massive positive steps to attract much-needed investments to Argentina’s capital intensive hydrocarbon sector. No surprise the Vaca Muerta has been at the center of nearly all discussions between Milei’s government and domestic producers as well as international oil companies (IOCs). And, in some major energy consuming countries like India and Germany, the discussions have been around importing the energy that Argentina can get to them, YPF SA Horacio Marín said in Houston in late-2024 during an IAPG event centered around shale in Argentina.
In order for Argentina to achieve a so-called oil and gas exporting glory, Milei has unveiled the new Incentive Regime for Large Investments, also known as RIGI.
It provides a favorable environment for investment, offering benefits such as lower tax rates, accelerated depreciation, and regulatory stability for 30 years. This affords investors an ability to protect their projects and investments from future policy changes, as well as enhanced investor protections.
It seems like a win-win, whichever way you read it. But, remember there are headwinds.
2 initial Argentine LNG export projects stand out
Milei’s plan looks to induce increased oil and gas production, increased piped oil and gas exports and Argentina’s massive leap into the liquefied natural gas (LNG) exporting club. And, the latter is year round.
Regarding the latter, Buenos Aires-based YPF is eying participation in 2 liquefaction projects in Argentina.
The first is Argentina LNG, the state-owned company’s project, in partnership currently with Shell plc.
Argentina LNG is envisioned in 2 phases with a combined export capacity of nearly 30 million tonnes per annum (mtpa).
Argentina LNG will consist of both offshore and onshore liquefaction export facilities that will source Vaca Muerta feedgas. The unconventional gas will be shipped through dedicated pipelines that will extend 580km to the processing and liquefaction facility to domiciled in Sierra Grande, Rio Negro, on the Atlantic coast of the South American country.
The second is Southern Energy SA, an ambitious joint venture led by Pan American Energy (PAE) and Norway’s Golar LNG.
This consortium, which also includes Argentina’s Pampa Energía and the UK’s Harbour Energy, will also source Vaca Muerta feedgas, and envisions developing a floating (FLNG) export project.
Southern Energy involves deploying Golar’s existing ‘Hilli Episeyo’ FLNG vessel off the coast of the Rio Negro province. This nearly 300m long vessel will operate off the Atlantic coast of Río Negro Province, in the San Matías Gulf. The location was chosen based on extensive bathymetric and oceanographic studies. And, the vessel will have production and export capacity of 2.45 mtpa of LNG.
These investments in liquefaction infrastructure, among others, will go a long way to support Argentina’s ongoing ambitions to become a world-leading year round producer of LNG.
And, considering the options or non-options in the Latin America and Caribbean energy spaces with issues in Venezuela (heavy oil, US sanctions, stagnant production), Mexico (limited resources, Pemex dominance, stagnant to declining production), Colombia (strong anti-fracking sentiment, limited reserves), Brazil (the spinning wheel that is the pre-salt with high decline rates, mainly an oil play) and Guyana (the prolific offshore Stabroek Block dominated by 3 companies: ExxonMobil Corporation, Hess Corporation–soon to be replaced by Chevron Corporation–and CNOOC), maybe, just maybe, Argentina with Milei is the most promising option in the region.
¡Viva la libertad, carajo!
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By Pietro D. Pitts reporting from Houston. © 2025 Energy Analytics Institute (EAI). All Rights Reserved.