Pitts: US Energy Pioneers, Capital Wanted for Vaca Muerta

When Argentina looks north of its border in particular, and Latin America’s border in general, it sees the U.S. and one thing: opportunity. Especially as it relates to shale and U.S. companies with experience in American shale plays. Why? Two words: Vaca Muerta.

Vaca Muerta or “Dead Cow” in English, is a massive shale formation in Argentina’s Neuquén Basin. It’s home to around 802 Tcf of shale gas. Geologically, it’s comparable to the Permian. And on some technical metrics it’s even better than the Permian, many energy pundits active in the Argentine energy patch say. But, despite its vast potential, Argentina lacks the resources—both in capital and technical expertise—to fully tap the true potential of the play.

Enter the aforementioned U.S. energy companies with shale experience.

Argentine energy ministers at the provincial and federal level, along with state-owned YPF, have set their sights on those companies, especially those that have mastered the art of extraction, production and export. The bigger the company, the deeper the expertise, the more capital at hand, the more Argentina wants them on board.

And that sense of urgency for U.S. investment is also being repeatedly relayed in research reports by the likes of Rystad Energy and other consultancies.

The call for U.S. investors is also coming from Argentine governors of key shale provinces, Argentine shale producers, and even from Argentina’s populist and ultra-liberal President Javier Milei.

Argentina’s latest legislative push is called RIGI, which is a Spanish acronym for Milei’s Incentive Regime for Large Investments. It is a law designed to provide long-term investment security for 30 years as well as tax benefits and is intended to provide the kind of stability that international investors in the country, and those looking to enter the country, demand. RIGI is at the centerpiece of Milei’s pitch for greater foreign direct investment in Argentina’s energy sector.

But the collective Argentine pitch to the U.S. shale patch isn’t just to attract know-how and capital. Argentina is also eyeing the equipment that powers the U.S. shale patch—rigs, compressors and the technology driving the Permian’s success. With an eye on drastically boosting oil and gas production, Argentina is keen to leverage U.S. expertise to transform itself into a reliable exporter of piped-oil and gas. By 2030, Argentina wants to become a year-round exporter of LNG, with Vaca Muerta providing the critical feed gas.

In the Argentine oil space, Vaca Muerta is producing just under 400,000 bbl/d. By around 2030, the formation could be producing close to 1 MMbbl/d, according to Rystad and Pluspetrol.

The Vaca Muerta is also producing around 3 Bcf/d but will need to increase that total at least an additional 4 Bcf/d to feed Argentina’s planned LNG facility, which is currently the top end of range for a 23 million tonnes per annum (mtpa) to 30 mtpa liquefaction project planned on Argentina’s Atlantic Coast.

Neuquén’s impact on Argentina’s total oil and gas production is massive. Vaca Muerta accounts for almost 59% of Argentina’s total oil production and 60% of gas volumes.

The world’s biggest upstream and oil service companies are already active in Argentina. The main IOCs in Vaca Muerta include: Chevron, Petronas, Shell, TotalEnergies, Wintershall Dea, Equinor, Vista Oil & Gas and Exxon Mobil. The main Argentine companies include YPF, Pan American Energy, Tecpetrol, Pluspetrol, Pampa Energía, Phoenix and GyP.

In the oilfield services space, the players already there with an operating footprint include Halliburton, Nabors and SLB.

But to realize Argentina’s full ambition in the sector, the Southern Cone country will need additional assistance. And such assistance will require the full force of U.S. industry—capital, technology and, above all, the experience that only American shale pioneers can bring to the table.

Milei’s government is traveling the world promoting investments in the nation’s energy sector as it looks to maximize revenues during a small window of opportunity that is the 2030 investment horizon. His model aims to convince investors they can invest and export from Argentina.

With Argentina’s history of debt defaults and seemingly ongoing talks with the International Monetary Fund for financial backing, RIGI is a massive bet on Vaca Muerta’s resources and revenue generating potential.