Alejandro Bulgheroni, president of Bulgheroni-owned Pan American Energy, convened a recent conference. Senior executives from YPF, Axion Energy, Pampa Energía, Vista Oil & Gas, Harbour Energy, Tecpetrol, Pecom, and the Argentine aristocracy from the Vaca Muerta shale resource in Patagonia attended. Today, such an event assumes proportions reminiscent of the gatherings of the ABA banking association in the 1990s or the meetings of the UIA during the Kirchnerite era. In the future, it is possible that such meetings will surpass the Sociedad Rural Argentina as the premier location for discussions among the ‘círculo rojo’ establishment.
This question is grounded in realistic calculations related to the level of exports leaving Argentina, without any speculation involved. In the coming years, Vaca Muerta is poised to surpass the agricultural sector as the primary source of foreign currency, positioning it as a coveted asset for the nation’s leaders. Nobody will have more dollars stashed away than those extracting oil and gas. Consequently, no pressure group will wield more influence than those present at the PAE meeting held at La Rural from September 8 to 11. Some individuals have already come to understand this reality. Four governors attended the PAE encounter, accompanied by numerous deputies, senators, and a variety of lobbyists exchanging their business cards. Undoubtedly a force in development. It is intriguing to reflect on the conclusions drawn from the September 10 event and the subsequent meetings, which provided three days of data, numbers, percentages, and trends – and undeniably, power, real power quantified in dollars, both present and future.
Vaca Muerta is indeed a reality. This year’s energy balance signifies a historic milestone, showcasing Argentina’s largest energy surplus in 35 years, attributed to a blend of increased local production and a decrease in imports. The initial eight months of the year have yielded an unprecedented surplus nearing US$4 billion, projected to exceed US$6 billion by year-end. From January to August, international sales of petrol and gas increased by 11 percent compared to the previous year, accounting for more than 13 percent of the nation’s total exports. Meanwhile, imports fell sharply by 23 percent, driven by a significant 46 percent decrease in gas purchases – the largest expenditure in prior years. Vaca Muerta represents the future. Two distinct visions exist regarding the potential level of exports from the Neuquén shale deposits, which extend into Mendoza, by the year 2030. The optimists discuss figures of US$36 billion and US$37 billion. Such a scenario would require substantial investment in infrastructure, a responsibility shared by both public and private sectors. It hinges on the sustainability of these investments, favorable international prices for gas and oil, domestic macroeconomic stability, and, crucially, the commitment of all governments to uphold Vaca Muerta as a state policy. On that last point, businessmen are optimistic, holding the belief that no politician “will shoot themselves in the foot.”
A second export scenario amounts to US$25 billion to US$26 billion. If there are no investments in infrastructure over the next five years, coupled with erratic macroeconomic policies and, fundamentally, a political class that fails to seize the opportunity, that would indeed be the case. Nonetheless, the export potential arising from this pessimistic scenario would still surpass the total sales of the farming sector, which amounted to US$24 billion last year. This is essential political information. Whoever is Argentina’s president in 2027 will face no external financing challenges during the final two years of their term. All the debt incurred with the private sector and the International Monetary Fund will be met on time and in full with the funds coming from Vaca Muerta. In other words, Argentina’s next head of state will not face the “external restriction” as there will be dollars available. The overarching concept is that investments this year and the next will benefit from the leverage. Absent this plan, advocated by President Javier Milei’s administration, the rapid development of Vaca Muerta would have been unfeasible. RIGI is recognized as the driving force behind the anticipated surge for the next two years. It is further believed that even with a change of administration after the 2027 elections, the next government will respect RIGI, or at least any amendments will not be radical. “Nobody shoots themselves in the foot,” sources reiterate, confirming that the legal protections for investments under the RIGI legislation are robust and reliable.
Interestingly, Vaca Muerta business leaders do not perceive any significant threats in the potential success of Peronism, Axel Kicillof, or Kirchnerism in 2027. Beyond the personal interests of those involved in oil or gas, certain factions of the opposition are believed to recognize the significance of Vaca Muerta in generating hard currency. The theory articulated by former president Cristina Fernández de Kirchner regarding the nation’s issue being the scarcity of dollars is referenced, with part of the resolution expected to arise from Vaca Muerta. Chevron’s involvement on July 16, 2013, is recalled. This was kept secret for years until the information finally emerged from the US oil company that it was merely something very akin to Milei’s RIGI scheme – essential in the aftermath of the re-nationalisation of YPF in 2012, when business reactions were more shock than empathy. Nevertheless, it is noted that in the partnership contract between Chevron and YPF, the ‘K’ realpolitik and the influence of then-YPF CEO Miguel Galuccio prevailed, ensuring direct investment from the earnings of the dollars invested. The oilmen present at the La Rural event organized by PAE on September 10 expressed confidence that this collaborative venture was a success, urging other oil companies globally to take notice of the shale deposits. Unless a Peronist leader makes a significant misstep, extreme mistrust is not prevalent among the companies in Vaca Muerta.
What is prompting foreign interests to exit Vaca Muerta? The list of oil companies with foreign capital that are leaving Neuquén is indeed significant and noteworthy. Total Energy, ExxonMobil, Petrobras, Petronas, and Equinor have all swiftly departed. Nevertheless, Argentine private-sector companies provide a clear rationale – they are frustrated with the ‘cepo’ capital controls that hinder their ability to remit dividends back to headquarters. A genuine and pressing issue with no foreseeable resolution in the near future, yet local companies demonstrate greater agility in navigating around it. The most significant initiative transforming the nation’s export landscape is the consortium led by PAE, in collaboration with YPF (25 percent), Pampa Energía (20 percent), Harbour Energy (15 percent), and Golar LNG (10 percent), which will require an investment of approximately US$7 billion.
The initiative is named Argentina GNL and revolves around the potential for exporting liquefied natural gas from the Patagonian coast, utilizing gas sourced from Vaca Muerta. Situated in the San Matías Gulf, this development currently involves the arrival of two liquefaction vessels: the Hilli Episeyo, set to become operational in 2027, and the MKII, expected to arrive from China in 2028. The initiative aims to substitute the troubled liquefaction facility that was initially planned for Río Negro following its relocation from Bahía Blanca.