Global shale was quickly thrust into the limelight when North America first discovered and began to develop its initial shale prospects during the early years of the shale revolution. It didn’t take long for other regions to take note.

In 2013 the Energy Information Administration ranked Argentina as the second largest shale gas reserve in the world, with onshore shale gas reserves estimated at 22.7 Tcm (802 Tcf). Argentina also was ranked the world’s fourth largest resource holder of technically recoverable shale oil, with reserves estimated at 27 Bbbl. Since 2013 Argentina has been making strides to attract the foreign investment needed to exploit its emerging unconventional plays and fund the expansion of existing infrastructure.

To support commercial production rates of unconventional resources on the necessary economy of scale, current facilities, pipelines and other supply chain systems will need to be expanded and updated. In October 2014 Argentina revised its hydrocarbon law in an effort to attract the investment and technical experience of foreign operators to spur exploration and development of its recently discovered unconventional shale resources.

Spanning late 2010 through 2011, Respol-YPF discovered the unconventional shale resources in the Neuquén Basin. Soon after, the Argentinean government, under President Cristina Fernandez de Kirchner, accused the company of underinvesting in exploration of Argentina’s shales and effectively expropriated all of Respol’s local assets in 2012 to YPF (now a separate national oil company [NOC]). Although an agreement was reached to pay reparations to Respol in early 2014, mid-way through the year the country managed to default on its debt a second time.

YPF predicts $200 billion over the next 10 years will be required to fully develop the Neuquén Basin’s Vaca Muerta Shale resources. With the amendments to its hydrocarbon law and the prices of oil and natural gas set artificially high by the state at $75/bbl and $7.50/MMBtu, respectively—currently the highest going prices in the world—Argentina’s shale basins could be garnering more interest.

A number of large operators such as Chevron, Royal Dutch Shell, Total Austral, Petronas and Exxon Mobil have joined YPF in increasing exploration activity. With political and economic uncertainty running high, along with high drilling costs and inflation, operators likely have been waiting to learn the results of the presidential run-off election in November 2015 (opposition presidential candidate Mauricio Macri won the election Nov. 22) and any potential policy changes before determining whether they will move forward to produce their assets.

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