Argentina - Renewable Energy Argentina-renewable-energy
Argentina features the world’s 4th largest reserves of shale oil and 2nd largest reserves of shale gas, located in the Vaca Muerta shale formation in the provinces of Neuquén and Mendoza.
Vaca Muerta’s shale quality, production incentives, tax exemptions, and negotiated labor concessions have contributed to lowering operational costs and increasing profit margins, thus encouraging investment and business opportunities for U.S. companies.
In February 2017, the Argentine government announced a special shale/nonconventional labor agreement with unions, private sector and key provincial governments to reduce labor costs by approximately 30 percent in that specific sector.
Since then, announced investments totaled US$6.63 billion in 2017 and US$9 billion in 2018. The investment forecast for 2019 is US$12 billion. Major players include Chevron, Dow, ExxonMobil, Pan American Energy, Pampa Energía, Tecpetrol, Total, Vista, and YPF, among others.
Further, the Argentine government projected reduction in energy subsidies for 2018 is 22.2 percent, subject to possible variation based on fiscal deficit reduction targets tied to the government’s agreement with the International Monetary Fund (IMF).
The Argentine government is currently working with the Governor of Neuquén and the Secretary of Energy to approve the execution of new E&P projects in Vaca Muerta – that will require additional investments of approximately US$3 billion – and to consider lifting a recently implemented 10.5% export tax affecting crude exports, mandated by Decree 793, enacted in September of 2018, to further stimulate industry growth. Further, the Argentine government recently launched its first auction in decades for offshore O&G acreage, encompassing 38 blocks in three basins (56 million acres/87,000 square miles). Thirteen companies submitted bids totaling USD $ 1 billion. Units of ExxonMobil Corp., Equinor, and Wintershall were among the companies that submitted winning bids. A second tender for additional acreage is in the works.
Summary of Industry facts:
Vaca Muerta’s shale quality, production incentives, tax exemptions, and negotiated labor concessions have contributed to lowering operational costs and increasing profit margins, thus encouraging investment and business opportunities for U.S. companies.
In February 2017, the Argentine government announced a special shale/nonconventional labor agreement with unions, private sector and key provincial governments to reduce labor costs by approximately 30 percent in that specific sector.
Since then, announced investments totaled US$6.63 billion in 2017 and US$9 billion in 2018. The investment forecast for 2019 is US$12 billion. Major players include Chevron, Dow, ExxonMobil, Pan American Energy, Pampa Energía, Tecpetrol, Total, Vista, and YPF, among others.
Further, the Argentine government projected reduction in energy subsidies for 2018 is 22.2 percent, subject to possible variation based on fiscal deficit reduction targets tied to the government’s agreement with the International Monetary Fund (IMF).
The Argentine government is currently working with the Governor of Neuquén and the Secretary of Energy to approve the execution of new E&P projects in Vaca Muerta – that will require additional investments of approximately US$3 billion – and to consider lifting a recently implemented 10.5% export tax affecting crude exports, mandated by Decree 793, enacted in September of 2018, to further stimulate industry growth. Further, the Argentine government recently launched its first auction in decades for offshore O&G acreage, encompassing 38 blocks in three basins (56 million acres/87,000 square miles). Thirteen companies submitted bids totaling USD $ 1 billion. Units of ExxonMobil Corp., Equinor, and Wintershall were among the companies that submitted winning bids. A second tender for additional acreage is in the works.
Summary of Industry facts:
- Recoverable Reserves
- Shale Gas: 802 Trillion Cubic Feet (TCF)
- Shale Oil: 27 Billion Barrels
- Wells Drilled
- 2009: 5
- 2018: 300
- 2023: 425 (projected)
- Non-conventional gas production increase: 34% YOY.
- Non-conventional oil production increase: 34% YOY.
- The oil & gas and mining sector concentrate 27% of total private investment.
- 2018 Oil & gas industry investment: USD 9 Billion (24% increase YOY), with 43% of referenced investment going to the gas segment.
- U.S. field equipment and technology enjoys a historical ~75% market share.
Secretariat of Energy https://www.argentina.gob.ar/energia
Integración Energética Argentina (Ex-ENARSA) IEASA
Argentine Institute of Petroleum & Gas IAPG
Argentina Oil & Gas Expo AOG
O&G industry Suppliers’ Expo ExpoCapipe
For additional information, including market analysis, trade events, contacts, and the products and services that the U.S. Commercial Service can provide to help you succeed in the Argentine market, please contact Marcelo Amden Industry Specialist